By Ted Schnell • BocaJump
Elgin’s business license has drawn an outcry from at least some business owners, although the level of opposition to the fee varies, depending on whom you ask.
Several members of the group Elgin OCTAVE — for Operant Conditioning To Achieve Vote Expectations — have called on the City Council several times in recent months to repeal the license. They say they represent a growing number of businesses opposed to the license, although they have declined to say how many.
City officials say there have been few complaints about the license, which was adopted in 2009 but was implemented in 2010.
But the curiosity of at least one member of the Elgin City Council has been piqued, and the council is expected to discuss the issue Wednesday night, Aug. 24.
“In the past few weeks, I've grown quite concerned with a variety of sub-issues associated with this ordinance,” Councilman John Prigge wrote in an email to BocaJump on Monday. “I have a handful of solid ‘what-if’ situations to present to my colleagues with the hopes of getting clarification and some dialogue about the possible answers.”
The “what ifs” he wants to discuss, he wrote in a subsequent email to BocaJump on Tuesday, involve enforcement, economics, fairness and values.
Relatively new fee
The City Council adopted the business license in December 2009 for implementation in 2010, although Elgin Chief Financial Office Colleen Lavery said the city did not actually start collecting fees on the license until the summer of 2010.
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 home businesses also are required to obtain the business license — if the business or home occupation required zoning approval to operate legally.
“We typically tie that into a zoning use,” Assistant City Manager Rick Kozal said. He explained home businesses where clients come to the home, or where the business stores its products, are typically the kinds of businesses that require zoning approval for a “residential occupation.”
Elgin Management Analyst Aaron Cosentino also noted that temporary merchants — such as participants in the downtown farmers market and a recent festival — are not required to obtain a business license.
There are business license exemptions for nonprofits, governmental entities, public utilities, churches and neighborhood groups. But the ordinance also gave downtown businesses a three-year exemption to the business license fee in consideration for the duress they endured during the massive street construction throughout the area over recent years.
License revenues short of expectations
City officials had hoped the business license fee would generate more money than it has. The revenues from license were intended to pay for purchase of service agreements with both the Elgin Area Chamber of Commerce and the Downtown Neighborhood Association.
In 2009, the city paid the chamber $124,575 and $70,000 to the DNA. The city increased that funding in 2010 to $400,000 for the chamber and $135,000 for the DNA after eliminating the economic development director and assistant economic development director positions. The city saved $280,000 with cuts to the economic development office.
The idea, Kozal said, was to have the chamber and DNA take on those economic development responsibilities and receiving funding for them as part of their purchase of service agreements. The City Council, he added, has final approval over economic development efforts made by the chamber or the DNA.
But Lavery said the city originally had hoped the business license revenues would cover the entire $535,000 paid to the chamber and DNA. That did not happen in 2010: Business license fees generated only $275,000 in 2010.
Cosentino said that roughly just 4 percent of the revenues generated by the business license came from those paying the $35 fees in 2010.
“But they seem to be the most vocal critics,” Kozal added.
