Letters urge businesses to comply with city law
By Ted Schnell • BocaJump
To paraphrase Mark Twain, the reports of a “crackdown” on Elgin businesses that appear reluctant to obtain a city business license appear to be greatly exaggerated.
Yes, businesses that have not obtained a business license as required under a nearly 2-year-old ordinance are being informed there could be consequences to failing to comply with the law, but to this point none are being forced to close and none are being fined, Assistant City Manager Rick Kozal said Friday.
The group Elgin OCTAVE, which wants the City Council to rescind the business license, has been pointing to letters the city sent out in August as proof that a crackdown is under way. OCTAVE has claimed there is growing opposition to the business license but has declined to discuss numbers.
But Kozal said there is no crackdown, although the city is trying to coax 485 businesses to obtain the business license and come into compliance with the law — and is meeting with some success.
Kozal said there are 2,129 businesses registered for a business license. The total, he added, includes nonprofits that are registered but not required to obtain a license, as well as downtown businesses, which the City Council exempted from the fee through 2012 in recognition that downtown businesses had been particularly hard-hit by reduced traffic downtown during several years of construction on the city’s massive downtown infrastructure improvements.
Letters urge compliance
The business license law became effective in 2010, he said, although the city did not begin pursuing unregistered businesses until midyear. He said the city’s approach on the issue in 2010 was the same as it has been this year.
“What we did in all instances, for each year we sent people three letters — a first letter, a second notice and a third notice — with varying degrees of success,” Kozal said.
This year, the city sent out two sets of letters in August. One was sent to 383 businesses that never registered in 2010 or in 2011. A second set of letters was sent out to 102 businesses that obtained a business license in 2010 but have yet to do so this year.
“The letters that went out in August, these were third-notice letters again for the 2011 year,” Kozal said. “… this was the first instance that I used the language that referenced the provision in the ordinance that states that failure to register under the business license ordinance could result in their business being closed and could subject them to daily fines,” Kozal said. “It was just a straight recitation of the ordinance.
“It doesn’t say it will happen … just that it could as a provision of the ordinance,” he said.
The ordinance allows fines up as much as $750 per day for businesses that refuse to obtain the business license.
Kozal pointed out that, when seeking compliance with a law, it is not unusual to point out the consequences of noncompliance. It’s not just an issue of enforcing the law, either.
“The idea is to kind of take out the hammer over there and let them know that there is some kind of consequence if they don’t do this,” Kozal said. “… Part of this, too, is that it’s not fair to the businesses that have been complying to allow those we have clearly identified and haven’t responded to our entreaties to keep thumbing their nose at this.”
Kozal said the city has required the license for two years now without forcing any businesses to close and without issuing fines.
Since the letters went out in August, Kozal said, 37 of the 383 businesses that had never obtained a business license did so, leaving 346 that are not in compliance. Of the 102 businesses that obtained licenses in 2010 but did not renew them in 2011, 21 did renew their business license, leaving 81 that have yet to comply.
Kozal added that the City Council was advised the city staff would be sending out the letters.
Implemented in 2010
The Elgin City Council established the business license by ordinance in late 2009. The intent was to generate revenue to pay Elgin Area Chamber of Commerce and the Downtown Neighborhood Association for economic development activities after the city cut its own economic development staff in a belt-tightening move.
Prior to that, the two agencies had received a combined total of nearly $195,000 through their annual purchase of services agreement with the city. That total was increased to $535,000 in 2010, and city officials had hoped the business license would generate enough revenue to cover that entire amount.
But the license fees have generated only a little more than half that amount — $275,000.
The business license fee is based upon the business’ square footage, from $35 for a business with up to 999 square feet to $595 for businesses whose square footage exceeds 40,000.
Kozal said Friday the license fee has been averaging about $130 per business.