Holladay business owners have had a rough ride. They lost their commercial core with the demolition of the Cottonwood Mall. Then they lost another retail center when the former Video Vern’s and Pardner’s Restaurant buildings were also razed. Interestingly, it was the government that facilitated the destruction of these buildings, not the business owners. With a lack of income tax being funnelled into the city, officials have initiated a new business license fee structure, which has caused many small business owners in the area to react.
Matt Happe, Silver Bean Coffee owner, has been vocal about the issue. Last year, he paid roughly $200 dollars. This year he was shocked by his $700 bill. “The city argued that a business like ours uses police services more than others,” Happe says. He wonders why a mom-and-pop shop would need to pay more for police services than, for example, a bank.
The increases were calculated on three costs: base administrative, regulatory and disproportionate service calls. It’s the last category that initiated the controversy.
Holladay Mayor Rob Dahle reviewed and approved the policy. He says the study was conducted as “an effort by our city to more closely attach the fees for the labor required to manage a specific business license use. Certain uses, such as food, convenience stores, etc. require a disproportionate level of service to monitor the license.”
“The problem is is that these costs have to be paid one way or the other,” adds Shantel Marsell city’s Business License Official. “Either it’s the residents or the businesses.”
Happe complained to the city council arguing that his business had been miscategorized. He won his case and paid a lower fee.
Jeremy Meier of Meier’s Chicken has operated his Holladay business for the past 37 years. During that time, he says, he’s only called the police three or four times. Like Silver Bean, Meier saw the cost of his business license triple last year.
Marsell says that, “What some of these businesses are not considering is that others are calling the police to that address.” The study based findings on historical records of the past few years. These small business owners feel that the lack of sales tax revenue from the non-existent mall has forced the city to compensate by increasing fees on established businesses.
Mayor Dahle says, “We have not raised property taxes since we incorporated in 1999. I feel we are responsible stewards of our community tax dollars. We are very careful to consider the impact to those affected whenever we undertake a fee/tax increase increase to our citizens.”
Happe, still dissatisfied with Holladay’s new initiative, adds, “We used to pay a standard fee, plus a per-employee additional, which is how our fees are paid in other areas.” Happe and his wife, Shannon Barkhe, own another coffee shop in West Valley City where they haven’t seen the same fee increase. Meiers also agrees that the fee is disproportionate to other area licenses. Not so, says Mayor Dahle who says that “if you compare our fee schedule to bordering municipalities, you will find they are in line.”
Many small businesses, however, are still struggling from the 2007 recession. Leslie’s French Pastries, family-owned for 28 years, has likewise seen a fee increase. Owner Bill Leslie says, “I see no reason why it had to go up so much, other than to get more money.” After paying the same rate for three years, the bakery saw a 45 percent increase.
City officials agree that the increase in fees can be frustrating but also confirm that this will be the only increase issued on business licenses. “Before, everyone was on the exact same fee schedule based on when Holladay was in Salt Lake County fifteen years ago. That’s why it was always so low, which explains this sticker shock,” Marsell says.
Flexible payment schedules can be set, and small businesses, such as Silver Bean Coffee, can plead their case to the city to renegotiate the fee.
But Happe maintains that while the city claims the increase was across the board, larger business with more than 60 employees saw a decrease in their annual fee. “They’re targeting everybody, trying to squeeze the blood out of everybody,” Meiers says, adding that he’s debated closing his business
In response to the threat of losing existing or potential local businesses, Mayor Dahle says, “I have heard this. That is why I called for the review with our planning staff. The perception is that we are unfairly targeting smaller businesses, and that is not the case. It is common for municipalities to periodically review their licensing schedules, to both adjust for actual cost, and to redistribute the fees from license to license, balancing our cost to the use.”
While the fees are across the board for large and small businesses alike, an increase in a business license will have a greater impact on small businesses. Leslie adds, “We’re always grateful for what we have business-wise, but we’d appreciate a little bit more.”
The city encourages any small business owners with issues about their new fee to contact Shantel Marsell or City Manager Randy Fitts.
To view the letter sent from the city, click here.
