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Business fees increasing, new fees considered by Durango City Council

Some businesses receive free licenses

Some businesses and all nonprofits have been issued free business licenses from the city, but that may end next year.

Businesses that hold liquor or marijuana licenses have not been charged when they acquire or renew other required licenses, said City Clerk Amy Phillips.

“It’s the way it’s always been,” she said.

Those businesses are likely unaware that they are not paying business license fees because they pay for expensive annual liquor and marijuana licenses, she said.

For example, The Wine Merchant pays $650 to the city and state in liquor license fees and $100 to hold tastings, said co-owner Eric Allen.

He was unaware that his annual fees did not include a business license.

“It wouldn’t surprise me if they change that because they love to collect those fees,” he said of the city leadership.

Last week, Durango City Council agreed to pursue changes to the business license fee schedule that would require liquor and marijuana business license holders and nonprofits to pay fees and also would increase fees to all businesses. The licenses are required because the city collects its own sales tax, Phillips said.

The changes could go into effect in 2017, and it would be the first update to the fee schedule since 2008.

An analysis showed in 2014 that the city made $163,308 on business licenses, but it spent $225,321 on processing them, said Ben Florine, licensing and records technician.

The increases in fees would help cover the cost of processing paper applications. All new applications must be submitted on paper, and about 40 percent of renewals are on paper as well.

“Yes, it does cost the city something, and yes, we should acknowledge that,” said Mayor Christina Rinderle.

Councilor Keith Brant suggested the city introduce a 10 percent discount to those businesses that renew their licenses online to cut back on the paperwork the city staff must process.

The increases in fees could produce about $60,000 in additional revenue, Phillips said.

Applying the same fees to all businesses sounds fair, said Jack Llewellyn, executive director of the Chamber of Commerce.

“If you are operating in the city limits in Durango, you should pay for the city licenses as everybody else does,” Llewellyn said.

But he is concerned about the cumulative effect of raising fees along with higher water and sewer bills and potential property tax increases for Durango-La Plata County Airport and county roads and bridges.

“Every time we turn around, businesses are getting hit with the brunt of supporting more and more,” Llewellyn said.

The city’s fee structure is based on the number of people a business employs, but it is capped at 21 employees. The new proposal creates five new tiers.

Llewellyn said the chamber may have some concerns about the tiers because the city spends the same processing business licences, regardless of size.

The lowest annual fee, for businesses with up to 5 employees, would increase from $50 to $60. This would apply to more than 2,000 businesses, according to city documents.

The highest fee is $122 annually and applies to all businesses with more than 21 employees. The new top tier would charge businesses of more than 501 employees $400 annually. This would apply to two businesses.

Marijuana- and liquor-licensed businesses, including bars, clubs and restaurants, would be subject to fees like any other business. Charging the 108 liquor-licensed businesses could generate about $10,260 annually, according to city estimates. If the city had charged these businesses the current average rate of $78 to renew their licenses from 2012 through 2015, it would have collected about $34,000. This does not include business license application fees.

Nonprofits would pay a flat fee of $30 under the suggested changes. While they do not generate sales tax, almost 100 nonprofits put on events every year that require the city to process liquor-license permits. The cost of these permits does not cover the staff time required, Phillips said.

Hotels and motels would also need to pay $30 a year annually for a sub-license fee that has been law since 2008, but it has not been enforced, Phillips said.

An occupational fee of $500 could be applied to five businesses with state-issued liquor licenses. By state law, these businesses do not have to pay for a city liquor permit. But the city can assess a flat fee to create a system for liquor-based businesses, Phillips said.

Michael McCardell, owner of Durango Craft Spirits Distillery and Tasting Room, who opened about a year ago, is opposed to the new fee because his business is subject to other taxes.

Distilleries must pay about $13.50 in federal taxes for every six bottles.

“It’s very damaging to us being a new start-up business ... $500 just takes away how much money we can put into our business,” he said.

mshinn@durangoherald.com

Oct 4, 2016
Proposed business license fee increases dropped
Sep 20, 2016
City delays decision on business license fees


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