RESPONSES TO: Home Occupation ordinances and application approval processes

 
From: "Judi Pickell via Utah Chapter APA Listserv" <utahapa@PROTECTED>
Subject: RESPONSES TO: Home Occupation ordinances and application approval processes
Date: January 24th 2018

Holladay’s response to SB 81 is pretty simple.  We don’t require nor offer a home occupation license to those who have no impact.

Here is a copy of what is on our website:

Changes in Home Occupation Licensing

As of May 9, 2017 the City of Holladay no longer issues business licenses for home based businesses that do not have employees or customers coming to their home.  This change is due to the recently approved state law.  In their 2017 session, the Utah State Legislature passed SB 81, which prohibits a municipality or a county from requiring a license or charging a fee for certain home based businesses.

Other home based businesses that have clients, customers or employees coming to the property will continue to be regulated by the City.  These businesses continue to be subject to the City’s zoning regulations including obtaining a conditional use permit from the Planning Commission.

Even though the City will no longer regulate certain home based businesses, it is vital to understand that they are still subject to registration with the State of Utah for tax collection purposes and owners of these businesses should contact the State of Utah Tax Commission for assistance in properly registering them when applicable to tax code Holladay 18065.

For questions or information regarding this new policy, please contact:

Angela Hummer, Business License Official
801-527-3890
ahummer@PROTECTED

 

If you have time to share your findings from other municipalities, we are curious what other locations are doing.

 

Let me know if this answers your question.

Have a great day,  best regards.

 

Angela Hummer

City of Holladay

Business Licenses

4580 South 2300 East

Holladay, UT  84117

Office: 801-527-3890

Fax: 801-527-3891

 

 

 

Here is Sandy's recent update to our ordinance. You can call or email me with specific questions.

 

https://library.municode.com/ut/sandy_city/ordinances/code_of_ordinances?nodeId=862057

 

Clearfield City still requires a license for Home Occs., but if the business qualifies under a list of criteria as “no impact” then there is no fee.

 

Spencer W. Brimley

Development Services Manager

Spencer.Brimley@PROTECTED

801-525-2785

 

Here is Sandy's recent update to our ordinance. You can call or email me with specific questions.

 

https://library.municode.com/ut/sandy_city/ordinances/code_of_ordinances?nodeId=862057



Mike Wilcox

Zoning Administrator

10000 S. Centennial Parkway | Sandy, UT 84070
o:
801.568.7261   |   f: 801.568-7278

mwilcox@sandy.utah.gov

 

 

 

 

This is what Tooele did

 

Anatomy of SB 81 Local Government Licensing Amendments

aka The Business License Bill

Prepared by Jodi Hoffman for the Utah League of Cities & Towns

Hoffman Law

 

SB 81 Local Government Licensing Amendments (“Business License Bill”) rescinded local jurisdictions’ authority to:

1.       Charge business license fees to raise revenues for general purposes;

2.       Charge business license fees for a small segment of home occupations; and

3.       Require a business operated “only occasionally” by a person under the age of 18 (e.g. a child’s lemonade stand) to obtain a business license.

 

Of all of the legislation directed at local governments in 2017, the Business License Bill has generated the most confusion and the largest number of questions from ULCT members.  Why?  Because the Business Licensing Bill impacts hundreds of business licenses that are issued on a daily basis and then tens (hundreds?) of thousands of licenses that will be re-issued annually.

                                                                                               

Each jurisdiction has a business license fee schedule that is tied to its mandatory annual licensing system.  Each business license system is interconnected with the jurisdiction’s land use regulations and its local code enforcement.  Each jurisdiction’s zoning, code enforcement, business license system and fee schedule is different from the next.  However, there is some common ground.

 

This memo is an attempt to answer the wide variety of questions the UCLT staff has received about the Business Licensing Bill.  Let’s start with the basics.

 

Why Do Cities License Businesses?

 

Cities license businesses for a variety of reasons:

 

1.       Ensure annual inspections for public safety;

2.       Register and track the point of sale for sales tax rates, collection and distribution;

3.       Land use review (is the business operating how and where it should?);

4.       Recover costs of annual inspections, regulation and land use review;

5.       Recover disproportionate costs of public services consumed by a business;

6.       Pay for an enhanced level of public service requested by businesses (i.e. bus service);

7.       Proof that the business is validly operating--required for a variety of reasons including lender inquiries, certifications, promotions, and state or federal regulations; and

8.       To raise general fund revenues

 

This year, the Business License Bill eliminated cities’ authority to raise general fund revenues from business license fees.

 

 

 

How does the “Revenue” Restriction in the Business License Bill Impact Your City?

 

The Business License Bill allows cities to charge fees only to recover the cost of regulation. As a result, each jurisdiction must determine how much it costs them to “regulate” each category of business.  The business license fee is limited to a licensee’s proportionate share of those costs. Each jurisdiction’s business license fee schedule should be based on a current business license fee study that identifies the jurisdiction’s actual costs of regulation. 

 

 

What is a Home Based Business?

 

The Business License Bill exempts “home based businesses” from business license fees.  The term “home based business” is narrow.  For most, it is a small subset of business authorized as a “home occupation”.

 

A home-based business is one that your code already allows within a primary residential home and has no material offsite impact in addition to the primary residential use.  In layman’s terms: it is a business that no one would know is there. 

 

Home Based Business License—Fee Exemption

 

The Business License Bill does not prohibit jurisdictions from requiring home-based businesses from obtaining a business license.  It just exempts them from the business license fee. 

 

Because the Business License Bill eliminates the “revenue” component of a business license fee, the practical effect of the fee exemption should be nominal.

 

To minimize the financial impact of the “home based business” aspect of the bill, some jurisdictions may want to amend their land use codes and their business license ordinances/fee schedules to include a narrow land use category that would qualify for the fee exemption, such as:

 

Home Occupation-Exempt— A business, transaction or activity conducted entirely within no more than 25% of a primary dwelling and exclusively by persons residing within the dwelling, in a manner that is indiscernible from, clearly incidental, and secondary to the residential use, without altering the dwelling site or structure, the character of the neighborhood, the demand for public facilities or services, creating an unsafe condition or providing a short term residential rental.

 

For those jurisdictions with an expansive definition of a Home Occupation--one that allows outdoor activities, outdoor storage, non-resident employees, customer visits, or other apparent business staging, a separate definition of an “Exempt Home Occupation”, coordinated with the specific definitions in your code, could help.

 

How to Implement a Fee Exemption

 

Each jurisdiction should consider modifying its business license application form to include an applicant’s requirement to request the fee exemption.  The applicant should affirm that the business will have no material offsite impact in addition to the impacts of the primary residential use.

 

In short, the Business License Bill does not require your staff to be a private investigator, or to quiz the applicant with 20 questions to identify a home-based business.  If an applicant requests the exemption (and the business is otherwise entitled to a license), simply issue the license without a fee.  Remember:  the neighbors will let you know if the business has off-site impacts.

What About Recouping Our Cost to Issue the License?

 

The Business License Bill prohibits a jurisdiction from imposing a business license fee on an exempt home-based business.  After the session, the bill sponsor indicated that he might support a bill that would allow for a nominal fee.  Stay tuned.

 

Until then, your jurisdiction must either issue the license without a fee, or consider modifying your ordinance to remove the business license requirement for this type of business.

 

What is a Business, Operated Occasionally, by Persons Under 18 Years of Age?

 

The Business License Bill prohibits cities from requiring a business license for a kid’s occasional lemonade stand. 

 

Technically, before the bill passed, operating a kid’s lemonade stand without a business license was a crime in most jurisdictions.  A lemonade stand fits the definition of a business. Most cities require all business to be licensed.

 

Apparently, one jurisdiction took this authority to its logical extreme and cited children for operating their lemonade stand without a business license.  Bad facts often make bad law.

 

Recommendations:

 

1. Review your business license fee system.

a. If your fee system generates general fund “revenue” in excess of your costs of business regulation, you will need to adjust your system:

b. Update/adopt a study and business license fee system for “cost recovery” only;

c. If certain types of businesses use disproportionate levels of public services (police, fire, EMT, transit, etc.?):  consider a separate study/system to recoup disproportionate costs through annual business license fees for those businesses.

2. Consider/adopt legislation to:

            a. Define a “no material offsite impact” type of home occupation;

b. Revise your current business license application form to allow applicants to request business license fee waiver for home occupations without offsite impacts;

c. Revise business license chapter code to exempt businesses operated only occasionally by minors (under 18 years of age) from the obligation to obtain a business license;

d. Adopt the new business license fee schedule.

3.  Train staff to implement the new system.

 

 

 

Judi A. Pickell

Executive Manager

American Planning Association

Utah Chapter

PO Box 1264

American Fork, UT 84003

phone – 801.450.2659

 

 

 

 

 

 

From: Judi Pickell via Utah Chapter APA Listserv [mailto:utahapa@PROTECTED]
Sent: Wednesday, January 24, 2018 1:32 PM
To: Utah Chapter APA Listserv
Subject: [UAPA] Home Occupation ordinances and application approval processes

 

 

 

I’m wondering if other municipalities could share what changes they have made to their Home Occupation ordinances and application approval processes following last year’s 2017 SB 81 that affected home business licensing.  Specifically, I’m wondering if other cities and counties are still requiring Home Occupation Permits and/or charging fees for those permits.

 

Thank you!

 

 

 

 

                                                           

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