Staff recommends that the language in the Business License Tax ordinance be modified by adding the provision that all applications for licenses, including first time licenses, licenses for newly established businesses, and renewals of any previously issued license be assessed a processing fee. This processing fee shall be fixed by resolution of the City Council. The fee resolution is scheduled to go before Council on June 17, 2003.

Staff surveyed other cities and found that many cities impose a processing fee for the processing of the business license application and renewal forms. City staff performed a time/motion study of the work involved in the review of new business license applications and the renewal of existing business licenses and concluded that a cost recovery fee of $27.00 for each new business license application and $17.00 for each renewal should be established. The fee for new applications is higher because all new applications require Planning approval.

This action is consistent with the City of Sunnyvale’s Fiscal Sub-element Action Statement 7.1A.1i: "Establish user charges and fees at a level closely related to the cost of providing those services."

As part of the budget reduction package for Fiscal Year 2003/2004, staff recommended that the Council approve the implementation of a new fee for the processing of new business license applications and business license renewals.

Council approved this in concept at the May 2, 2003 special meeting. This item is being brought before the Council before the fee resolution so the processing fee can be implemented as soon as possible in Fiscal Year 2003/2004. It is anticipated that the ordinance will be adopted on June 17, 2003 and become effective on July 17, 2003.

Businesses which are Not-For-Profit are not required to obtain a business license because they are exempt from the tax. Notwithstanding this, many have registered with the City in the past. If these businesses wish to remain in the database, they may continue to renew their license without paying the tax. However, they would be subject to the renewal processing fee. Similarly, if an exempt businesses were to apply for the business license for the first time, they would be exempt from the tax but would be required to pay the new application processing fee.

It is estimated that $36,990 will be generated as a result of imposing the new business license application processing fee and $120,700 will be generated as a result of the renewal processing fee. The total revenue is estimated at $157,690.

Public contact was made through posting of the Council agenda on the City’s official notice bulletin board, posting of the agenda and report on the City’s web page, publication of the Council agenda in the San Jose Mercury News, and the availability of the report in the Library and the City Clerk’s Office.

1. Approve the proposed change to Chapter 5.04 of the Sunnyvale Municipal Code, relating to Business License Tax processing fees.
2. Do not approve the proposed change to Chapter 5.04 of the Sunnyvale Municipal Code, relating to Business License Tax processing fees.

Staff recommends Alternative #1.