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TO: Standing Committee on City Services and Budgets
FROM: Director of Finance and Director of Permits and Licenses
SUBJECT: 1998 Business License Fees and Liveaboard Fees
A.THAT business license fees be increased by 4.0 percent for 1998 as outlined in this report and detailed in Appendix A, representing a general increase of 1.0 percent and an additional 3.0 percent increase to cover the cost of city support services, except for those fees for non-profit activity as listed in Appendix B.
B.THAT the fees for liveaboard boat owners be increased in 1998 by 6.7 percent.
C.THAT the Director of Legal Services be instructed to prepare the necessary By-law to implement the revised fee schedule for January 2, 1998.
The General Managers of Community and Corporate Services RECOMMEND approval of A, B and C.
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.
The purpose of this report is to seek Council approval for a 4.0 percent increase in business license fees and a 6.7 percent increase in liveaboard fees for 1998. The 4.0 percent increase for business license fees includes a 1.0 percent increase for wage increases and a 3.0 percent increase to offset the cost of city support services. The 6.7 percent increase in liveaboard fees represents the increase in the residential tax levy since the last fee increase, two years ago.
This report recommends that the base fees for 1997 business licenses be increased by 4.0 percent, with the exception of a limited number of categories related to charitable or non-profit work.
The proposed 4.0 percent fee increase is comprised of two components:
Anticipated cost increases for administration of the license system in 1998.
-An additional 3.0 percent increase reflecting Council’s direction to staff on 28 November 1996 to capture all the costs of supporting the business license system. This increase will cover costs such as city support services including computer systems, legal services, and other administrative support, that has not been included in the review of business license fees in previous years.
-The 4.0 percent rate increase in 1998 will ensure that license revenues continue to track administration and enforcement cost increases.
This recommended increase will raise the fee for a basic business license to $88 in 1998 from $85. 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. (Appendices A and B on file in City Clerk's Office).
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 theCity.
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 fee has been kept at rates comparable to residential units in the area, but does not recognize that the provincial government offers homeowner grants to traditional housing forms. Research indicates that a modest one bedroom condominium with a water view typically sells in the $140,000 - $160,000 range; and therefore pays approximately $900 in property taxes per year.
In developing the 1997 liveaboard license fee the Director of Finance considered a variety of methods for calculating the appropriate rate of increase. This included 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, Council felt that the most appropriate way of adjusting fees would be to peg the increase to the change in property taxes paid by residential taxpayers. For 1997, this increase was based on a 0.1 percent tax levy increase levied in 1996. As an increase at this level would not have produced a meaningful increase, Council held fees at the 1996 level but noted that the foregone increase be considered in establishing fees for 1998.
Based on the methodology established by Council in 1996, the proposal for 1998 liveaboard fees is to apply a 6.7 percent increase. This includes the 0.1 percent carry over from 1996 and a 6.6 percent increase for 1997.
The current and recommended liveaboard fees are listed in Table 1:
Length of Boat at Waterline Fee Fee
Based on anticipated increases in operating costs in 1997, business license fees should be increased by 4.0 percent. It is further recommended that liveaboard fees be increased by 6.7 percent, recognizing that fees were last increased two years ago. This significant increase is largely a result of a 6.6 percent increase in the residential tax levy in 1997 which was necessary to offset budget reductions caused by a cut in provincial government transfers to the City.
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(c) 1997 City of Vancouver