SUPPORTS ITEM NO. 6
CS&B AGENDA
NOVEMBER 28, 1996
ADMINISTRATIVE REPORT
November 12, 1996
TO: Standing Committee on City Services and Budgets
FROM: Director of Finance and
Director of Permits and Licenses
SUBJECT: 1997 Business License Fees and Liveaboard Fees
RECOMMENDATIONS:
A. THAT business license fees be increased for 1997 as
outlined in this report and detailed in Appendix A,
representing a general inflationary increase of
1.0%, except for those fees for non-profit activity
as listed in Appendix B.
B. THAT the fees for liveaboard boat owners not be
increased in 1997.
C. THAT the Director of Legal Services be instructed to
prepare the necessary By-law to implement the
revised fee schedule for January 1, 1997.
Should Council approve the recommendations of the
companion report related to staffing increases required
to improve business license enforcement in the
Department of Permits & Licenses the following is
RECOMMENDED:
D. THAT business license fees recommended above be
increased an additional 4.0%, plus an 18.0%
increase to business license fees for liquor-related
establishments as listed in Appendix C, to offset
the cost of five new positions for liquor license
and problem premise coordination.
GENERAL MANAGERS COMMENTS
The General Managers of Community and Corporate Services
RECOMMEND approval of A, B and C, and provided that the
companion staffing report related to business license
enforcement is approved RECOMMEND item D.
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COUNCIL POLICY
Council, on January 17, 1991, resolved:
That every department/board review services for which
fees are now charged to ensure full cost recovery, or
that fees are equivalent to competitive charges where the
fee is of a market nature.
PURPOSE
The purpose of this report is to seek Council approval for an
inflationary increase in business licenses and a zero percent
increase in liveaboard fees for 1997. Council is also
requested to consider options for funding five new positions
for liquor license and problem premise coordination at an
annual cost of $339,800.
DISCUSSION
1. Business License Fees
This report recommends that the base fees for 1997 business
licenses be increased by 1.0%, with the exception of a limited
number of license categories related to charitable or
non-profit work.
The proposed fee increase is based on the annual rate of
inflation for Vancouver in 1996 and ensures that license
revenues continue to track administration and enforcement cost
increases. This recommendation will increase the fee for a
basic business license to $80 from $79 in 1996. Appendix A
provides the complete fee schedule and Appendix B lists the
fee categories for which no increase is proposed. Fees are
rounded to the nearest dollar.
There will be a major review of all business license fees
after Permits & Licenses completes its Business License
Re-Design project expected before the end of 1997. This
project will result in technological innovation and new
administrative and handling procedures that will stream-line
business license applications and renewals. It also provides
an appropriate point at which to undertake a comprehensive
review of business license fees.
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1A. Liquor License and Problem Premise Coordination
In a companion report, Council is asked to consider the
addition of five new positions in Permits and Licenses and
Legal Services to deal with liquor license and problem premise
issues. The estimated cost of the program is $339,800 per
annum, including allowance for salaries, benefits, additional
overtime, office supplies and furniture, computers, and
training.
Council policy is that when new program costs are added to the
budget, they are to be fully recovered from fees and charges.
To ensure full cost recovery for these new positions, two fee
proposals are brought forward for Council s consideration.
Each of these represent increases in fees beyond the 1%
inflationary increase recommended above.
Option #1:
General 4.0% Increase to all Business Licenses Plus an 18%
Increase to Business License Fees for Liquor-Related Premises
Option 1 allocates the additional costs on the same basis that
they are incurred to service specific classes of business.
This is consistent with the basis on which existing business
license administration and enforcement costs are allocated in
the business license fee schedule and ensures each class of
business pays its own costs.
Overall, it is anticipated that these new positions will spend
approximately 20% of their time dealing with issues that are
directly related to liquor establishments. The balance of
their efforts (80%) will be directed at a broad range of
business classes. For this reason, Option 1 proposes to
distribute the costs as a 4% general fee increase to apply to
all business licenses and an additional 18% increase directed
at establishments holding liquor licenses.
If Council approves Option 1, the basic license fee will
increase to $83 from $80 (after the inflationary fee increase
recommended above). Liquor-related business licenses will
increase by an additional 18%. For a cabaret this will mean
that the annual business license fee will increase from $436
to $540. The impact of this increase on other liquor-related
business licenses is illustrated in Appendix C.
The Director of Finance and Director of Permits and Licenses
support this option.
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Option #2:
General 5.0% Increase to Apply to All Business Licenses
Option 2 would allocate the costs of the new program uniformly
across all types of business, requiring a fee increase of 5%
beyond the inflationary increase recommended above. In this
regard, the general business license fee will increase from
$80 to $84. However, as noted, this approach represents a
departure from Council s normal pricing policy under which
costs are allocated to those activities that generate the need
for regulation.
2. Liveaboard Fees
Since 1974, the City has levied a license fee on marina
owners based on the boat length, measured at the water line,
of each liveaboard 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. Currently there are 98 liveaboard boats registered
at marinas in the City.
The current liveaboard fees are indicated in Table 1:
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Table 1:
Current and Recommended Liveaboard License Fees
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Current
Length of Boat at Waterline Fee
<=21 $609
>21 and <26 $737
>26 and <31 $828
>31 and <37 $947
>= 37 $1,044
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While liveaboard fees are not calculated on the same base as
that used for calculating taxes on real property, they have
historically been compared with the taxes levied on
residential condominium properties. This is because the
occupancies of liveaboard boats and condominiums, and their
use of public services, are likely similar. Generally, the
liveaboard fees have been kept below those for residential
units because the liveaboard owner is not eligible for the
homeowner grant.
In developing the 1997 liveaboard license fee the Director of
Finance considered a variety of methods for calculating the
appropriate rate of increase. This includes the method used
in past years which increased fees based on the overall
increase in residential tax revenue, net of new construction
and vacant land. However, since the charges relate to
individual properties or boats rather than to whole classes of
property, it seems the most appropriate way of adjusting fees
is to peg the increase to the change in property taxes paid by
residential taxpayers. In 1996, this increase was based on
Council s 0.1% tax levy increase. As this will not produce a
meaningful increase in liveaboard fees, it is recommended that
fees be held at the 1996 level but that the foregone increase
be considered in establishing 1998 fees.
CONCLUSION
Based on anticipated increases in operating costs in 1997,
business license fees should be increased by 1.0%. Liveaboard
fees will be excluded from an increase. There is also a need
to raise approximately $339,800 to offset the cost of five new
positions for liquor license and problem premise coordination
should Council approve the companion staffing report.
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