ADMINISTRATIVE REPORT

TO:

Standing Committee on City Services and Budgets

FROM:

Chief License Inspector in consultation with the Director of Finance

SUBJECT:

Year 2004 Business License Fee Amendments and Other Miscellaneous License By-Law Amendments

 

RECOMMENDATIONS

D. THAT a new Retail Dealer - Market Outlet license category for retail businesses in a premises greater than 50,000 square feet be defined and included in Schedule A of License By-Law No. 4450 with a fee of $3,000.00 per annum.

E. THAT Council instruct staff to review all retail stores, including those selling food, between 10,000 sq. ft. and 50,000 sq. ft. in order to make recommendations on further expanding the subcategories of retail dealer licenses.
F. THAT a new Residential Rental Unit license fee category be defined and included in Schedule A of License By-Law No. 4450 with a corresponding fee per unit of $49.00 per annum.

G. THAT Section 24.2 of License By-Law No. 4450 pertaining to rental agencies be deleted.

H. THAT the license fee categories under the Exhibition section in Schedule A be deleted and replaced with the license fee categories in Appendix C.

I. THAT the license fees pertaining to occupied live-aboard boats be deleted from Schedule A of License By-Law so that new fees to be approved by Council further to a subsequent report by Financial Services can be included at that time.

J. 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, 2004.

GENERAL MANAGER'S COMMENTS

The General Manager of Community Services RECOMMENDS approval of the above 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 2004 business license fees. A 2.75% fee increase is proposed for all business license categories with the exception of charitable or non-profit categories listed in Appendix A , live-aboards, retail-grocery and liquor license categories, which are to be treated differently for reasons outlined in this report. A separate report addressing proposed fee increases for live-aboards will be presented to Council by Financial Services in a subsequent meeting. Finally, this report also provides Council with an update on the license fee changes to financial institutions, vending machines, bank machines and secondhand dealers and pawnbrokers approved in 2003.

BACKGROUND

In the fall of every year, the License Office prepares an administrative report to Council proposing an across-the-board inflationary adjustment in business license fees which reflects the estimated growth in City costs for the following year. Although this adjustment is appropriate for most businesses, a higher fee increase may be required for certain businesses that incur higher inspection or administrative costs or possess fees that are no longer appropriate in comparison to other Lower Mainland municipalities. In addition to license fee adjustments, the administrative report also allows staff to propose other miscellaneous amendments to the License By-Law necessary to address outdated regulations or increase the effectiveness of certain methods of conducting internal business.

For 2002, Council approved a number of significant changes to the License By-Law through the annual business license fee administrative report. These included a change in the application of license fees for liquor license establishments from a flat-fee per business to a $4.00 per seat basis, a higher fee increase for Dwelling Unit rentals, new administrative fees for obtaining copies of licenses and requests for name or address changes and greater penalties for failure to pay a prescribed license fee by a fixed payment date.

For 2003, Council approved a higher fee increase for adult entertainment stores and financial institutions, enabled fees for new business license to be prorated on a monthly basis, implemented a first-year license fee with a $50 administration charge and changed the method of license fee collection for vending machines including washers and dryers, bank machines and those dispensing merchandise or providing services.

For 2004, staff recommend the creation of three new license categories, including Retail Dealer - Grocery, Retail Dealer - Market Outlet, and Residential Rental Unit and the deletion of Section 24.2 (Rental Agency) of the License By-Law.

DISCUSSION

1. Year 2004 Business License Fees

2. Year 2004 Liquor Establishment License Fees

The maximum and minimum fees for liquor license establishments will be increased only by the proposed inflationary adjustment of 2.75% for 2004 as these fees were increased last year by 2.25%.

It should also be noted that the later closing hours for liquor establishments have resulted in added enforcement costs. The VPD will be reporting back on any increased resource requirements due to changes in liquor regulations.

3. New Retail Dealer License Categories: Grocery and Market Outlet

Currently, License By-Law No. 4450 has two retail dealer license categories, Retail Dealer and Retail Dealer - Food, distinguished from each other on the basis of food being offered for sale. An internal policy further breaks down the Retail Dealer -Food category into small and large retail stores, where the latter, referred to as Retail Dealer - Grocery, sell food as a primary use and include a bakery, butcher, delicatessen and food service (snack bar). Some examples include Safeway, IGA, T & T Market, and Great Canadian Superstore.

An obvious inequity also currently exists within the Retail Dealer - Grocery and general Retail Dealer license classifications. The substantially larger retail grocery stores, such as the Great Canadian Superstore, normally over 50,000 sq. ft., selling primarily food but also large quantities of other commodities and providing a multitude of services, are being charged the same fee as the smaller neighbourhood grocery store that may offer only a small deli and limited butcher service. As well, large retail stores in the City that do not sell food but offer a wide range of other commodities and services, such as Home Depot, Rona and Hudson's Bay, are currently charged the same $97.00 license fee as much smaller, local neighbourhood retail stores.

To address the above inequities, staff recommend that the Retail Dealer - Grocery classification currently applied through internal policy be formally defined as a license fee category in the License By-Law and included in Schedule A of the By-Law with a corresponding fee of 600.00 per annum.

Furthermore, it is recommended that a new Retail Dealer - Market Outlet license category for retail businesses in a premises greater than 50,000 sq. ft. be defined and included in Schedule A of License By-Law No. 4450 with a corresponding fee of $3,000.00. This category will include all retail stores greater than 50,000 square feet with or without food sales. As can be seen in Appendix B, using an example of a 55,000 square foot grocery store with more than 50 employees, the proposed fee of $3,000.00 is an approximate average of the fees charged by the select Lower Mainland municipalities.

Finally, staff recommend that Council request staff to review all retail dealer stores, including those selling food, within a 10,000 sq. ft. to 50,000 sq. ft. premises in order to make recommendations on further expanding the sub-categories of retail dealer licenses in the future.

In summary, the proposed changes will result in the Retail Dealer license categories shown in the table below:

RETAIL DEALER LICENSE FEE CATEGORIES

LICENSE CATEGORY

PROPOSED LICENSE FEE (2004)

Retail Dealer

$100

Retail Dealer - Food

$187

Retail Dealer - Grocery

$600

Retail Dealer - Market Outlet:
>50,000 sq. ft. premises

$3,000

The new retail dealer license categories are to be defined in the License By-Law similar to the following:

"Retail Dealer - Grocery" - means any person not otherwise herein defined who carries on the business of selling commodities including foodstuffs directly to the public and normally provides two or more of the following: bakery, butcher, delicatessen and food service (snack bar).

"Retail Dealer - Market Outlet"- means any person not otherwise herein defined who carries on the business of selling commodities which may include foodstuffs directly to the public in a premises with a total floor area greater than 50,000 square feet.

4. New Residential Rental Unit License Fee Category

In the Past, the City has experienced problems with a growing number of enforcement issues related to rental dwellings including marijuana grow operations, and now some of these are occurring in strata-title dwelling units and other residential rental units rented out by an absentee owner. To help control the problems the by-law requires landlords to obtain a business license. To ensure that all rental units require a license, a change in the license By-law should be made to capture all rental units.

The License By-Law now permits the City to license any dwelling, sleeping or housekeeping units, regardless of the number of units owned by an individual, under the definition of a "Multiple Conversion Dwelling", but changing and modifying this definition to "Residential Rental Units" will clarify the issue.

It is recommended that the new Residential Rental Unit license category be defined in the License By-Law similar to the following:

that a person rents, intends to rent, or customarily rents to a tenant, except for a unit in an apartment building, duplex, hotel, lodging house, rooming house, or bed and breakfast;

5. Deletion of Regulation Pertaining to Rental Agencies

"Rental Agency" in License By-Law No. 4450 is defined as "includes any person who, by contract or agreement and for a fee, provides information respecting residential accommodation which is available for rent or lease."

Section 24.2 of the License By-Law states that no rental agency shall directly or indirectly take, accept or receive any deposit, or charge and collect any fee for any services rendered to a person seeking residential rental accommodation unless and until such person has successfully obtained rental accommodation as a direct result of such services; PROVIDED HOWEVER, that any rental agency may charge and collect a registration fee not exceeding five dollars.

For these reasons and the fact that the City has received few complaints concerning this particular regulation since 1974, it is recommended that Section 24.2 of License By-Law No. 4450 be deleted.

6. Amendment of New Exhibition License Categories in Schedule A

Currently, the Pacific National Exhibition pays the City a set fee for its annual fair on a yearly basis. This fair normally offers a number of attractions such as games or rides including, but not limited to, ring or ball throwing games, hammer striking machine, jugglery, and merry-go-rounds and ferris wheels. As these attractions are offered in Vancouver exclusively at the PNE and therefore, are already included in the annual PNE license fee, it is not necessary to include them as separate license categories in Schedule A. Any temporary circus or other similar event would be covered under the remaining Exhibition categories. Therefore,staff recommend that the license categories under the Exhibition section of Schedule A be deleted and replaced with the license fee categories shown in Appendix C.

7. Update on License Fee Changes in 2003

Vending Machines Dispensing Merchandise or Providing Services

Prior to 2003, a license fee of $24.00 per vending machines was charged to the owners of vending machines. In 2003, Council approved the collection of a fee of $15.00 per vending machine directly from the owner/occupier of the premises in which the machines are operated. A reduced fee was charged because so many businesses now normally have more than one vending machine available to their patrons and the previous $24 fee per machine could exceed the business license for the establishment. Furthermore, it was felt that a reduced fee of $15.00 would be easier to collect and would not result in significant new enforcement costs.

It is anticipated that the expected revenue resulting from the change in license fee collection for vending machines in 2003 will not be realized until Year 2004 as enforcement staff did not have sufficient time this year to identify all the vending machines that had previously gone unlicensed. Furthermore, as the vending machines that were recorded during routine business inspections were not included on the original bill, billing in process was found to be ineffective. This problem will be rectified in 2004 as the vending machines recorded this year will be included on the annual license fee notification bill for the business. Therefore, the vending machine fee will be submitted along with the business license fee for the year.

Washers and Dryers

Historically, fees for unlicensed washers and dryers were difficult to collect due to problems with gaining access into individual buildings. Therefore, in 2003, Council approved the elimination of individual licenses for washers and dryers and the application of an additional fee of $2.00 per apartment unit on top of the existing annual license fee for the building.

This change has resulted in revenue of approximately $115,000 for 2003 which is similar to the washer and dryer vending revenue from 2002.

In 2003, Council approved an increase in the license fee for financial institutions (ie. banks, credit unions and trust companies) from $95.00 per annum to $1000.00 per annum. With few complaints received by the License Office, it appears that this change proceeded without any significant problems.

In 2002, owners of bank machines were required to pay the City a license fee of $95.00 per year for each machine. However, in 2003, Council required that license fees for bank machines not physically connected to a bank/credit union be paid by the owner/occupier of the business the machine is located in as this would eliminate the problem of having to track down the owner (s) of the machine to collect the required monies. Further, Council approved a reduction in the bank machine license fee from $95.00 per year to $40.00 per year. This was intended to pose less of a financial burden on the smaller business owner and the increased license fee for chartered banks/credit unions would ensure no adverse impact on the City's revenue.

Records indicate that in 2002, a total of 136 bank machines were licensed. At $95.00 per machine, this resulted in revenue of approximately $13,000. In 2003, all bank machines physically connected to financial institutions were accounted for in the fee increase for chartered bank/credit union to $1000 discussed above. Hence, the bank machines licensed in 2003 included only those physically separate from financial institutions, including a certain number picked up by Property Use Inspectors during routine inspections which had not been licensed in the year prior. The number of bank machines licensed in 2003 was 174 which at $40, resulted in revenue of approximately $7,000. An additional approximate $177,500 was received from the new bank fees.

Amendments to Secondhand Dealers and Pawnbrokers By-Law No. 2807

In 2002, Council approved amendments to License By-Law No. 4450 and Secondhand Dealers and Pawnbrokers By-Law No. 2807 which introduced new definitions for types of secondhand dealer businesses, revised the definition of pawnbroker, proposed amendments to the Secondhand Dealers and PawnbrokersBy-law to acknowledge these new definitions and recommended a new license fee structure to take effect January 1, 2003. The increases to Secondhand Dealer and Pawnbroker license fees were required to provide funding for the estimated ongoing costs to support the Internet-based property reporting system and associated staffing.

It is estimated that the City will receive approximately 10% (10,200)less than the projected incremental revenue from the secondhand dealer and pawnbroker license fee increases in 2003. However, the expenses for 2003 are also less than the projected amount of $107,200 as the full-time position required by the VPD was not filled until part way through the year. It is expected that, in 2004, there will be a full-year of costs that are incurred in support of the X-Tract reporting system. Staff will then be in a better position to report back on the results of the program and provide information about ongoing funding levels required as well as the potential for any offsets from the retail and insurance industries.

FINANCIAL IMPLICATIONS

The proposed inflation adjustment fee of 2.75% for Year 2004 business license fees (except those related to charitable or non-profit work (Appendix A), live-aboards and liquor license categories) will be revenue neutral as it is expected that costs will increase by a similar amount. The establishment of the new Retail Dealer - Market Outlet category will result in an approximate $21,000 increase in revenue for 2004.

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 those charitable or non-profit categories detailed in Appendix B, live-aboard license categories and liquor license categories) of 2.75% for Year 2004 to recover estimated inflationary cost increases resulting in the growth of City expenses.

This report also recommends the further adjustment of some fee categories and the establishment of new license types in order to better reflect costs and eliminate some inequities with the current regulations.

- - - - -

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 New Retail Dealer License Categories: Lower Mainland Municipalities

City

Retail Dealer/Trader License Fee Calculation

Store:
10,000 sq ft
25 staff
6 registers

Store:
35,000 sq ft
40 staff
10 registers

Store:
55,000 sq ft
>50 staff
12 registers

Surrey

Retail Merchant (20 or more employees)

$195/year + $80.00/cash register

$195 + $480 = $675

$195 +

$800 =
$995

$195 +

$960 =
$1155

Burnaby

Retail Trader - Food
1st Year Renewal
1-10 persons $587 $266
11-50 persons $779 $456

51+ persons $1,087 $902

$779 (First Year)/ $456 (Renewal)

$779 (First Year)/ $456 (Renewal)

$1,087 (First Year)/
$902 (Renewal)

Richmond

Assembly Use Category (Group 1)
Sq m Sq ft Fee
0.0-93.0 0-1000 $133
93.1 - 232.5 1001 - 2500 $202
232.6 -465.0 2501-5000 $350
465.1-930.0 5001-10,000 $562
930.1-1860.1 10,001-20,000 $997
1860.2-2790.1 20,001-30,000 $1,427
2790.2-3720.2 30,001-40,000 $1,862
3720.3-4650.2 40,001-50,000 $2,292
4650.3-5580.3 50,001-60,000 $2,726

5580.4+ 60,001+ $3,090

$562.00

$1,862

$2,726

Port Coquitlam

Retail and/or Wholesale Sales
Building or shop with a total floor
area of up to 300 sq ft = $70.50
For each additional 100 sq ft or
fraction thereof = $15.00

$70.50 + $1,455.00 = $1,525.50

$70.50 + $5,205.00 = $5,275.50

$70.50 + $8,205.00 = $8,275.50

Coquitlam

Retail Sales
(a) up to 30 sq m (322.93 sq ft) of
floor space accessible to the public = $80.00
(b) for each additional 10 sq m
(107.64 sq ft) of floor space
accessible to the public = $16.00

$80.00 + $1,438.43 = $1,518.43

$80.00 + $5,154.53 = $5,234.53

$80.00 +

$8,127.40 = $8,207.40

District of North Vancouver

Retail Trader
For the first 70 sq m (753.50 sq ft) of sales, service, display & storage space or any portion thereof contained within the building, the sum of $122.00
For each additional 90 sq m (968.78 sq ft) of sales, service, display & storage space or any portion thereof contained within the building, up to 900 sq m (9687.84 sq ft), the sum of $74.00
For each additional 90 sq m (968.78 sq ft) of sales, service, display & storage space or any portion thereof contained within the building, in excess of 900 sq m (9687.84 sq ft), the sum of $30.00
For each 98 sq m (968.78 sq ft) or portion thereof of outside ground storage area adjacent to the building, the sum of $12.00
To a maximum of $3,300.00

$122.00 + $706.29 = $828.29

$122.00 + $740.00 + $760.50 =

$1,622.50

$122.00 + $740.00 + $1,380.00 =

$2,242.00

New Westminster

Retail Traders - persons engaged in business
1-3 $137.50
4-10 $200.00
11-25 $379.50
26-50 $758.00
51-100 $1,546.00
Over 100 $2,101.00

$379.50

$758.00

$1,546.00

Vancouver

Retail Dealer
Retail Dealer - Food
Retail Dealer - Grocery (proposed)
Retail Dealer - Market Outlet (proposed):
(a) 25,000 - 50,000 sq. ft. premises
(b) >50,000 sq. ft. premises

$97
$187
$600

N/A
N/A

N/A
N/A
N/A

$1,000
N/A

N/A
N/A
N/A

N/A
$3,000

LINK TO APPENDIX C

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cs20031023.htm

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