1. Business Registration ProgramPlanning Department
201 lat Avenue East
Kalispell, MT 59901
Phone: (406) 758-7940
Fax: (406) 758-7739
www.kalispell.com/planning
REPORT TO: Honorable Mayor and City Council
FROM: Jane Howington, City Manager
PJ Sorensen, Planner
SUBJECT: Business Registration Program
DATE: August 23, 2010 (Work Session)
BACKGROUND: Earlier this year, the Council discussed the issue of business licenses and
directed staff to bring forward a proposal for consideration. There are many benefits of such a
program, both for the individual businesses and the City as a whole. For example, obtaining a
business license can help a business make the right decisions before they invest in a particular
piece of property. For the City, better knowledge about which businesses are coming and going
leads to better administration of life/safety codes, and can help with economic development
information.
Recognizing these benefits, every other large city in Montana (as well as many smaller
ones, such as Whitefish and Columbia Falls) has utilized business licenses in one form or another
for a long time. Most cities directly tie the license to a safety inspection, typically involving
their building and fire departments, but sometimes including zoning, public works, and the police
departments. In fact, it is such a common expectation across the state that our staff routinely
receives calls from new businesses asking how to obtain a license. When told that we don't have
one, they usually won't believe it at first.
Staff has put together a draft ordinance (see attached) based upon several assumptions
about the goals and basic concepts for the program. The two primary assumptions are (1) that
the Council is interested in more of a business registration concept as opposed to a
compliance/safety inspection certificate model; and (2) that the program should be revenue -
neutral (i.e. charging fees sufficient to cover costs and not generate revenue).
By a business registration, it is assumed that the goal of the program would be to provide
an updated list of businesses, provide information to businesses before they open, and allow for
the City to be aware of any issues which may need to be addressed. Staff included a provision in
the proposal which states that a business registration certificate "shall certify only that a
completed form and fee were duly submitted, and shall not certify compliance with any other
federal, state, or local law, code, or regulation."
The compliance/safety inspection certificate option, in contrast, would involve a
certification by the City that the business would be in compliance with City regulations. A
compliance certificate gives an added level of security to the business, but the certification
process would be much more involved than a simple business registration. It would take
substantially more staff time and, as a consequence, would lead to a higher fee to maintain a
revenue -neutral program.
Under either option, the fees would need to be set by the Council under a separate fee
schedule adopted by resolution (a suggested fee schedule and budget is attached). The basis for
the fee would be largely dependent upon whether the Council pursues a business registration or
compliance certification concept. Other considerations would include software and other
operating costs of the program. Council should also take into consideration that we are already
providing a level of service to businesses as part of our annual inspection program. The
program, which is currently provided free of charge, involves annual inspections for bars,
restaurants, day cares, and other uses which have state licenses requiring such inspections. We
also regularly provide fire inspections for all commercial properties.
Additionally, staff assumed that the program would be a free-standing city code section,
involve annual renewals, and have a one to two year phase -in for existing businesses.
Following the June 7 meeting, during which the Council directed staff to refine the
proposal and bring it back for a work session, staff has researched questions raised at the meeting
and contacted other cities in the state to see how their programs are structured.
Summary of Other Cities' Pro ams
Missoula: Their program generates $800,000 on an annual basis. There are about 6500
businesses in the city. Building, Fire, and Public Works Departments do fully detailed
inspections. Minimum fee is $72 plus $18 per full-time employee over four, up to a maximum
fee of $1775.
Great Falls: It is not a "business license" except for businesses located outside the city limits
doing business in the city. They do have a safety inspection certificate. Fees are $140 for up to
2000 sq ft; $175 for up to 10,000 sq ft, $225 for up to 25,000 sq ft, $285 for up to 50,000 sq ft. It
includes a zoning compliance permit for $25. It is intended to generate revenue. Renewals for
each category are $55/85/125/180/300. They pick up non -applicants on yearly checks with fire
inspections.
Helena: Their program is old and the person we spoke with prefers the Great Falls model. He
used to work there and the Great Falls system was tested in court about 14 years ago and upheld.
Some businesses (professions licensed by the state) would be exempt under business license, but
not a safety inspection. Their business license software costs $30,000 plus 15% per yr for
updates/maintenance. They only generate about $96,000 annually in fees, but they are in the
process of updating their fee table. Their current fee table is based on the number of full-time
employees and range from $25 to $400, with home occupations being $10.
Bozeman: Five departments review it — police, fire, zoning, building, and engineering. They
issue the license first, but do some inspections just prior to opening. They use the HTE
licensing program as a computer database. There is a $25 minimum fee, with fees stepping up to
$50/75/125/200/250 based upon the square footage of the business.
Billings: They have a "business tax," but it includes a compliance check for fire (not for home
occupations) and code enforcement. They have a base fee of $55 based on gross revenues, plus
$50 for health fees, $6/empl over 5, $500 liquor, and $200 beer/wine, with a 50% penalty fee
plus 1 % if delinquent. Their computer software is the enterprise system (just getting off of
HTE). Enterprise is an on-line system.
Whitefish: The building, zoning, fire departments review all applications, and the police
department is involved in some as well. Their program includes both home occupations and
apartments. They use the Black Mountain business license module, which costs about $3000,
but does not include the ability to submit on-line. Fees are based on square footage - $30 for less
than 500 sq ft; $50 for 500 to 2000 sq ft; $70 for 2000 to 10,000 sq ft; and $100 for larger
businesses.
Columbia Falls: They license anyone "making money in the city," which includes Kalispell
contractors doing work in Columbia Falls. They do not do any inspections as part of the
business license. Their fee is $40, although beer/wine/liquor is $312. They use Excel for their
database.
Specific Questions Asked by Council
Privacy: Once concern was the possibility that someone would use the list of business
registrations as a marketing list. Under Montana law (Section 2-6-109), the city cannot distribute
the list without the permission of those on the list. While the list is available to view as a public
record, most cities will not provide a copy of the list and have adopted a variety of standards to
help ensure that privacy is maintained.
Professions: Another concern regarded certain professions already licensed by the state (i.e.
Montana Code Title 37 — Professions and Occupations). Those cities which use a standard
business license model exclude those professions from their program. Others, which use a safety
inspection certificate as the basis of their program, include those professions. The distinction
used is that, if the requirement is for a license to do business, the state has priority. However, if
the requirement is for a safety inspection or some purpose other than a license to do business, the
purpose of the program is different than the state license and applying the city requirement is
appropriate. For example, an engineer may want to build an office to house his firm. The fact
that the engineer is licensed by the state does not eliminate the need to obtain and pay for a
building permit or to pay property taxes.
Specific Benefits: Council was interested in specific ways that a business registration
program would be beneficial.
One key benefit would be that the Fire Department would see significant improvements
in its ability to pre -plan for fires by interacting with businesses before they move into a location.
Besides becoming more aware of where new businesses are located and whether or not there are
any hazardous substances which could be a problem in a fire, being able to address issues related
to sprinklers, exiting, and fire separation in a timely manner is critical to public safety. Business
registration would go a long way towards protecting businesses from fire risks and providing
more safety to firefighters in the field.
Similarly, the Building Department would have an early notice of a new business locating
or re -locating in the community. The building department will then have an opportunity to talk
to the tenants/owners about remodel plans, code requirements, access and exiting issues and
other safety issues as this is the time when remodel plans are initiated and safety and access
issues can be discussed. It is much more difficult after the tenants have invested money and
already moved in. Also, the fire inspectors would have an updated list of businesses to conduct
annual fire inspections.
Third, the Planning Department would be able to contact new businesses before they
move in and invest money in a location to determine if the zoning and signage is appropriate. In
the recent past, we have had similar issues with residential units downtown, medical marijuana, a
casino, a crafts store, day cares, group homes, athletic clubs, etc.
Fourth, the City is currently developing a wastewater pre-treatment program. This
program will define the types of uses that will require some type of pre-treatment of wastewater.
At the most basic level, this pre-treatment includes a grease trap for restaurants and other food
services that may contribute fats, oils and greases to the wastewater collection system. The
Public Works Department could benefit from the registration program by using the program as
an information -gathering point. This information (type of use, level of use, etc.) could then be
used to assist businesses in developing and implementing their own pre-treatment facilities and
in the implementation of a city-wide pre-treatment program.
Fifth, the City has a permit to discharge storm water. This permit is issued through the
National Pollutant Discharge Elimination Program (NPDES) and is managed by the United
States Environmental Protection Agency (USEPA). The City's permit defines several practices
that must be followed in order to maintain the permit and meet federal and state storm water
standards. One of these practices is to educate the community about the proper storage and
handling of chemicals and materials that may present a hazard to clean storm water discharge.
The business registration program would allow City staff to gather information regarding the
location of these chemicals and would facilitate the public education process.
Sixth, the Public Works Department develops and updates models of the City's utilities.
These models are used to determine what improvements are necessary and the most efficient way
to expand the utility systems. A critical component to developing these models is the collection
of current data (demands on the utilities) and the subsequent calibration of the model. The
business registration program could provide a comprehensive "snap -shot" of the demands on the
various utility systems. These demands could then be used to update and calibrate the utility
models, which would in turn assist City staff in managing the systems and in providing an
expected level of service to the community.
Finally, the Police Department indicated that better knowledge of where types of
businesses are located would aid in their ability to discern patterns in criminal activity (such as
burglaries) and contact businesses as a pre-emptive measure if they do see a pattern.
RECOMMENDATION: Council should direct staff to bring the ordinance forward and discuss
implementation.
ALTERNATIVES: As suggested by the Council.
ATTACHMENTS: Draft Ordinance
Suggested Fee Schedule and Budget
Business Registration Form example
Respectfully submitted,
PJ Sorensen Jane Howington
Planner II City Manager
Report compiled August 16, 2010
C: Theresa White, Kalispell City Clerk
Kalispell Business Registration Program
Section 15.3.100: Purpose. The purpose of this chapter is to better provide public services
and promote the public health, safety, and welfare through a business registration program. The
program will provide better information for the administration of public safety functions such as
annual fire inspections and emergency response, as well as other city programs such as economic
development, building codes, zoning, and provision of public utilities. The business registration
program is not intended to certify compliance with any federal, state, or local law.
Section 15.3.110: Definitions:
(1) Business: Any individual or entity engaged in the purchase, sale, offering for
sale, or other transaction involving the handling or disposition of any article, service,
substance or commodity for livelihood or profit, or the management or occupancy of the
office buildings, offices, recreation or amusement enterprises, or the maintenance and use
of buildings, offices, structures, or premises by professions and trades or persons
rendering services. As used in this Article, the term business shall include any use other
than single-family and duplex use, including, but not necessarily limited to, home
occupations and multi -family dwellings containing three or more units.
Section 15.3.120: Business Registration Required — New Businesses. Any business to be
located within the city limits of Kalispell shall submit a business registration application form to
the City and receive a business registration certificate prior to opening. Annual renewals of the
business registration certificate shall be submitted by the business prior to January 31 each year
for continued operation.
Section 15.3.130: Business Registration Required — Existing Businesses. Businesses in
existence at the adoption of this chapter shall submit a business registration application form to
the City within one year of the date of adoption. Annual renewals of the business registration
certificate shall be submitted by the business prior to January 31 each year for continued
operation.
Section 15.3.140: Exemptions. Temporary activities of one -week or less located on
publicly owned property, including, but not necessarily limited to, public parks and fairgrounds,
are exempted from the business registration requirement.
Section 15.3.150: Business Registration Application Form Requirements. The business
registration form and renewal form shall include the following:
(1) Name and address of the business;
(2) Phone number and other contact information;
(3) Type and description of business activity;
(4) Number of employees;
(5) Date that the business started at this location;
(6) For new registrations, the previous use of building space;
(7) Presence of hazardous chemicals or other hazardous conditions; and
(8) Payment of a fee as established by resolution by the City Council.
Section 15.3.160: Business Registration Certificate. Upon receipt of a completed business
registration application form and the associated fee, the City shall issue a business registration
certificate or renewal certificate, as appropriate. The certificate shall certify only that a
completed form and fee were duly submitted, and shall not certify compliance with any other
federal, state, or local law, code or regulation.
Section 15.3.160: Failure to Register. Any business which fails to register as provided by
this chapter may be subject to penalties as a municipal infraction pursuant to Chapter 1, Article II
of the Kalispell City Code. Each day of continued violation shall constitute a separate,
additional violation. The City Manager or the Manager's authorized agent is hereby authorized
to enforce this chapter by issuing a civil citation.
Kalispell Business Registration Program
Cate2ory
Status
Fee
Est. #
Revenue
General Business
New
$ 30
100
$ 3,000
Re -new
$ 20
1,700
$34,000
Sprinkler/alarm
Installations
New/re-new
$ 50
50
$ 2,500
Liquor license
New
$200
4
$ 800
with business
Re -new
$ 10
40
$ 400
Med Marijuana
Re -new
$200
8
$ 1,600
Day care
New/ re -new
$ 30
45
$ 1,350
Assisted Living
New/re-new
$ 50
10
S 500
Hospital
New/re-new
$200
1_
$ 200
TOTALS 1,958 $44,350
ASSUMPTIONS
® There are approximately 2,000 businesses in Kalispell, we currently have no accurate list
or contact information.
0 1/3 will register the first year, (First year income of $15,000)
• 2/3 will register by the second year (Second year income of $30,000)
® 95% will be registered the third year (Annual income of $42,000)
• City fire inspectors, as they make their inspection rounds, will check and enforce the
registration program thus bringing the majority of businesses into compliance
® Initial business registration will occur through mailing and PSA announcements. This
will create a cost in terms of letters/postage.
® Renewals will occur using a web based online computer registration program once the
businesses are in the system.
First year expenses/income as follows:
0
2 mailings/advertising-
S 4,000
o
Equip/supplies -
$ 3,500
o
Credit card/bank fees -
$ 2,000
o
Web program -
$30,000
o
Software setup -
$ 1,000
0
1/3 staff -
Existing staffing
o
IA year total expense -
$40,500
o
ISt year income -
$ 15,000
o
ISt year deficit -
$25,500
Second year expenses/income as follows:
0
1 mailing/advertising -
$ 2,000
o
Web maintenance -
$ 1,000
o
Equip/supplies -
$ 3,000
o
Credit card/bank fees -
$ 2,000
o
I/ staff -
Existing staffing
0
2nd year total expense -
$ 8,000
o
Carry over deficit -
$24,500
0
2nd year income -
$30,000
0
2nd year deficit -
$ 2,500
® Third year expenses/income as follows:
0
1 mailing/advertising -
$ 2,000
o
Web maintenance -
$ 1,000
o
Equip/supplies -
$ 3,000
o
Credit card/bank fees -
$ 2,000
o
'/ staff -
Existing staffing
o
Total cost -
$ 8,000
o
Carryover deficit -
$ 2,500
0
3' year income -
$42,000
0
3' year end balance -
$31,500
'Tl OTCity of Kalispell
-
Post Office Box 1997 - Kalispell, Montana 59903
MO
jyA Telephone: (406) 758-7701 Fax: (406) 758-7758
City of Kalispell Business Registration Application
❑ New Registration/Transfer to New Location ❑ Annual Renewal
Name of Business:
Address of Business:
Contact Name:
Emergency Contact/Phone Number:
Contact Phone Number:
Type of Business and Detailed Description of Business Activity:
Number of Employees: Full-time: Part Time:
Date Business Started/Will Start at this Location:
---Previous use of Building Space (new registrations only):
Please describe any hazardous chemicals or other dangerous conditions which may be present at
the business location (attach additional sheets if necessary):
I understand that this business must be operated in compliance with all applicable federal,
state, and local laws, codes, and regulations. I understand that the issuance of a business
registration certificate does not certify compliance with any such laws, codes, or regulations,
and that the business is responsible for ensuring that its activities are in compliance.
Signature Date
Printed Name
Title
Office Use Only
Fee Payable: $ Cash/Check No.:
Business Registration No.:
Receipt No.:
Processed By: _