By Ted Schnell • BocaJump

If Elgin’s business license ordinance is going to change, it won’t be until after the first of the year, when the city will have a full two years of data to evaluate its merits, the City Council decided Wednesday night.

The council voted to defer consideration of any changes to the business license ordinance until after the new year, and the city staff was directed to come back at that time with a formal presentation to dispel what appears to be a lot of misinformation that is being spread about the business license, council members said.

Councilman John Prigge started the discussion during the council’s Committee of the Whole meeting, saying he believed the city should remove the requirement that home-based businesses obtain such a license.

There were four factors he said led him to that conclusion:

• Enforcement — He noted that a license for a home-based business would cost $35, and the fine for noncompliance could be as much as $750 a day. He also questioned whether it would be cost-effective for the city to track down home businesses to enforce the ordinance.
• Fairness — Also tied to enforcement, Prigge questioned whether the ordinance clearly defines what constitutes the type of home business that would require a license. Because some such businesses do not require a license, Prigge said “the line on this is always going to be fuzzy … it will be left up to interpretation …”
• Values — Prigge questioned the value of licensing home-based businesses in terms of economic development. The city’s goal with the business license was to fund economic development efforts by the Elgin Area Chamber of Commerce and the Downtown Neighborhood Association. But Prigge pointed out that only 4 percent of the $275,000 generated by the business license can be attributed to home-based businesses.
• Economics — He said he is afraid the business license will stifle the dream of owners of home-based businesses. Prigge said it used to be that home-based businesses were considered more of a secondary source of income, but that appears to have changed. “Now I am getting the impression this is more a livelihood for many of these people,” he said, alluding to the nation’s economic struggles that have left so many unemployed.

Prigge urged the council to act quickly to consider removing the license requirement for home-based business before “a very busy budget season” gets too far under way.

But several council members expressed reluctance to consider action. Councilman John Steffen asked pointedly for a staff presentation to the council on the matter. He said there is a lot of misunderstanding about how the business license applies to home businesses and a formal presentation by the city staff might help dispel some of that.

Not long after that, Councilwoman Tish Powell offered similar remarks.

Assistant City Manager Rick Kozal did attempt to outline what, under the business license and city ordinances, constitutes a home business that would require the license. It boiled down to home businesses that fall under regulation of the city’s zoning ordinances. In essence, Kozal said home-based businesses that have an impact on the neighborhood — whether because they receive regular shipments of merchandize or clients coming to the home — are those that would need a business license.

Those who simply work from a computer in their homes, such as day traders, he explained, would not fall under the requirement to get a business license.

Kozal added that in 2010, there were 36 home-based businesses that were issued business licenses; there have been 37 so far this year.

Other issues related to the business license were discussed as well, but in the end, Mayor David Kaptain suggested the council wait until after the first of the year to review the business license ordinance. He said the ordinance will have been in effect a full two years in January, which will provide more data to consider before talking about changing the ordinance.

There was discussion of suspending enforcement of the business license on home-based businesses, but City Manager Sean Stegall objected, saying the city would be on shaky legal footing if it did so.

Councilman Robert Gilliam agreed.

“Let's not play games with it — let's wait until January,” he said.

The council voted unanimously to defer further consideration of the ordinance until January.