Agenda Index City of Vancouver

POLICY REPORT

LICENSING

TO:

Standing Committee on City Services and Budgets

FROM:

The Chief License Inspector

SUBJECT:

Amendments to License By-Law No. 4450: Payment and Terms of License Fees

 

RECOMMENDATIONS

GENERAL MANAGER'S COMMENTS

The General Manager of Community Services RECOMMENDS approval of A and B above.

COUNCIL POLICY

Council, by way of License By-Law No. 4450, regulates the payment of fees for business licenses in the City of Vancouver.

On June 26, 2001, Council passed the following motion:

PURPOSE & SUMMARY

The purpose of this report is to propose amendments to License By-Law No. 4450 which delegate the authority to set terms of licenses to the Inspector, enable fees for new business licenses to be prorated on a monthly basis and implement a first-year license fee which includes a $50 administration charge.

BACKGROUND

On July 26, 2001, Council approved funding for various changes in the License Office necessary to enhance operational efficiency and improve customer service. These changes included enhancements to the License+ software and computer system required for a new version of License+ software, conversion to Oracle server, the implementation of cycle billing and internet payment access.

The required enhancements to the License+ software and computer system, as well as the conversion to Oracle server, have recently been completed allowing the introduction of the new version of License+ at the end of June 2002. Internet access for dog license renewals was implemented in September 2000 and for a certain limited number of business license categories in late 2001. The goal is to include most of the additional business license categories onto the Internet license renewal system for 2003. This report addresses cycle billing, the remaining operational change to be implemented, as well as other proposals concerning terms and payment of license fees.

The implementation of a form of cycle billing or proration of license fees has become a feasible option for the City as a result of an amendment to the Vancouver Charter made in October 1999. Prior to this amendment, the Charter required that licenses expire on December 31 of the year in which they are issued and provided no flexibility to prorate fees for licenses issued part way through a year. Now, Council is authorized to set the term ofa license for any period up to two years from the date of issuance of the license and to prorate license fees in relation to the actual term of the license. The License By-Law may also provide for different terms for different classes of licenses and Council may delegate the authority to set the term of a license to an officer or employee of the City under conditions established in the by-law.

DISCUSSION

Cycle Billing

On June 26, 2001, Council was advised that cycle billing would be implemented as a twelve (12) month license renewal process where dog and business licenses issued annually by the City would expire and be renewed by category at various times throughout the year rather than on December 31st. The intent was to reduce the heavy volumes in the first three months of the year by distributing the existing workload more evenly throughout the year.

After considerable discussion on the pros and cons of implementing this method of cycle billing, staff have concluded that the overall costs would outweigh the benefits to the City and the customer. Specifically, the implementation of this form of cycle billing has been reconsidered for the following reasons:

1. Presently, all licenses expire at the end of the year. License renewal notifications are mailed out every year at the end of November advising licensees of the fixed date for payment (ie. the second business day of February) and the penalties applied should payment not be received by this date. The annual license renewal process, involving preparing and mailing license renewal forms and sorting and processing cheques mailed in by customers, is labour intensive and time-consuming. If each license category was to expire at a different time of the year, the license renewal process would have to be repeated every month, placing a considerable amount of additional work onto staff already laden with a heavy workload.

2. Enforcement of license fee payments would be considerably more difficult if each license fee category expired at a different time of the year. Presently, City enforcement staff must ensure that all businesses/dogs in their respective districts are licensed and that these licenses are renewed every year. Keeping track of paid/unpaid licenses is easier when all licenses expire at the same time of year. The administrative complexity and extra time that would be required in monitoring licenses with different expiration dates would place a greater burden on enforcement activities, already operating at maximum capacity.

3. One of the objectives of cycle billing was to improve the efficiency of the License Office. However, customers can now renew dog licenses and a limited number of business license categories via the Internet and will be able to renew most business licenses on-line by the Year 2003. Partial implementation of the license on-line renewal process has resulted in approximately 1000 business licenses being renewed via the Internet in 2002. The increased efficiency of the License Office is evident when considering the improved turn-around time for license renewals every year. Even greater administrative efficiency is expected once more customers are able to renew licenses on-line. Current heavy customer volumes in the office during the first three months of the year will be reduced and the existing workload will be distributed more evenly throughout the year.

Currently, the City hires four temporary employees over a 3.5 month period at the beginning of each year to process license renewals. If cycle billing was to be implemented throughout the year, current workloads would not be able to absorb the functions performed by the temporary employees thus necessitating the addition of one permanent staffing position. This makes the implementation of cycle billing cost neutral. Therefore, considering the points above, it is not feasible to implement cycle billing. However, with the implementation of internet license renewal, there may be opportunities to find efficiency improvements in the future.

Proration of License Fees

Currently, customers are charged the license fee stipulated in Schedule "A" of License By-Law No. 4450 when purchasing a new license between January to July and half of that fee or the license transfer fee, whichever is greater, when the license is purchased during the remaining five months of the year. Over the years, the City has received many complaints from new business operators about the unfairness of applying the license fee in this manner. Customers who commence their business part way through the year believe that the fee should be prorated so that they are charged only for the number of months that the business has been or will be operating. Staff concur that this is a more equitable method of applying license fees for new businesses.

Therefore, staff recommend that all new business license fees be based on a monthly calculation and applied starting from the month that the business commenced operation. Any person applying for a new business license with an annual fee over $10.00 would pay the first year license fee as stipulated in Schedule "A" to the License By-Law divided by the number of months the business has been or will be in operation in the calendar year the application is made (rounded up to the nearest whole number) or a minimum administration fee of $50, whichever is greater.

Persons applying for license categories with an annual fee of $10.00 or less would pay the City the fee for such business, trade, profession or other occupation as stipulated in Schedule "A", irrespective of how long the business has been in operation or when the application is being made.

New First-Year License Fee

The proposed proration of license fees is being introduced to enable customers commencing their business part way through the year to pay only for the number of months the business has been or will be in operation. This will introduce a more equitable system of license payment for the customer. However, it will also decrease the City's portion of total revenue normally generated from new business licenses over a full year as first-time licensees currently pay for a full year license if paying prior to July 31st and half of the license fee if paying after this date. As well, the processing time required for new licenses is considerably greater than for license renewals since the majority of new license applications require clearances from Zoning, Building, and in some cases, Health and Police.

The new prorated license payment system for first time license buyers will bring in less money since most customers will pay only a portion of the amount they would have paid under the current system. However, the processing requirements (ie. City costs) for the issuance of these licenses will not change.

To account for the cost of processing new business license applications and recover the lost revenue resulting from prorating license fees for new businesses, it is recommended that a new first year license fee be established by adding an administration charge of $50.00 to each existing fee category, with the exception of charitable and non-profit categories with a fee of $10.00 and under, late night dance events, exhibitions, public markets operating on a daily temporary basis and transient peddler/trader one-week licenses, and Schedule A of License By-Law No. 4450 be amended accordingly.

It is estimated that the implementation of the first-year license fee will be revenue neutral, however this will depend on the number of new businesses starting up within the year relative to the number of renewals for the same year.

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Delegation of Authority to Set License Terms to Chief License Inspector

Staff recommend that Council delegate the authority to set the term of a license to the Chief License Inspector under conditions established in the License By-Law; a feasible option for Council as a result of amendments to the Vancouver Charter in October 1999.

With authority to set terms of licenses, the Chief License Inspector can establish certain licensing policies designed to better serve the needs of the customer. One such policy would give those applicants purchasing a license in the remaining two months of the year ie. November and December the choice of paying the license fee as stipulated in Schedule "A" of the License By-Law divided by the number of months the business has been in operation in the year the application is made or paying the amount aforementioned plus the full fee for the year succeeding the year of application. The latter option would eliminate the need for licensees to return to City Hall early in the New Year, to renew their license.

With authority to set terms of licenses, the Chief License Inspector would also be able to match the expiration dates of those business license categories requiring Provincial certification to the expiration date established by the Province. Currently, provincial certifications for certain occupations, including, but not limited to, electrical and gas contractors and hairdressers, expire at different times throughout the year whereas City licenses for these occupations expire on December 31st. Matching municipal and provincial expiration dates would eliminate this administrative confusion.

Proposed Amendments to License By-Law

It is proposed that the License By-Law No. 4450 be amended generally as set out in Appendix A to this report subject to such changes as the Director of Legal Services considers necessary.

CONCLUSION

The proposed amendments to the License By-Law No. 4450 as outlined in this report will
delegate the authority to set terms of licenses to the Inspector, enable fees for new business licenses to be prorated on a monthly basis and implement a higher first-year license fee which includes a $50 administration charge for all license categories, with the exception of charitable and non-profit categories with a fee of $10.00 and under, late night dance events, exhibitions, public markets operating on a daily temporary basis and transient peddler/trader one-week licenses. These changes will enhance the efficiency of the License Office and Property Use Division and significantly improve customer service.

- - - - -

APPENDIX A

Proposed Amendments to License By-Law No. 4450:
Changes to Payment and Terms of License Fees

1. Base all new business license fees on a monthly calculation to be applied starting from the month that the business has commenced or will commence operation as follows:

2. Establish a new first-year license fee by adding an administration fee of $50.00 to each fee category, with the exception of charitable and non-profit categories with a fee of $10.00 or under, late night dance events, exhibitions, public markets operating on a daily temporary basis and transient peddler/trader one-week licenses, and amend Schedule "A" accordingly.

3. Delegate the authority to set terms of licenses under conditions established in the License By-Law to the Chief License Inspector.

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