By Ted Schnell • BocaJump | Jan. 25, 2012

It’s been nearly eight months since Elgin resident Chuck Keysor and local businessman Craig Mason announced the formation of Elgin OCTAVE, a special interest group whose aim was to convince the Elgin City Council to repeal it’s now 2-year-old business license.

On Wednesday, the group will find out whether its efforts — speaking out against the licenses, sending out emails detailing arguments against it, and rallying businesses to turn out to council meetings to protest the measure — have fallen on deaf or receptive years.

The City Council on Wednesday is scheduled to review the business license as Mayor David Kaptain vowed it would months ago. In response to OCTAVE’s repeated criticisms of the business license before the City Council, Kaptain at one point told the group there would be no action on the business license until the council had all the data in terms of revenue and related information for the first full two years of the program. That council deliberation, he said, would come in January 2012.

For OCTAVE, Wednesday’s meeting may represent a last ray of hope in its battle to repeal the business license, which is among the first items up for consideration on the council agenda.

OCTAVE has condemned the license for an array of reasons that include:

• It is an unnecessary tax;
• It unfairly benefits the Elgin Area Chamber of Commerce and sets up a potential conflict of interest pitting the chamber’s need for city funding against the needs of its dues-paying members.
• That the program is not being administered fairly — that a number of larger businesses have evaded the business license.
• That the business license also is unfair because the city has not been enforcing it.

Assistant City Manager Rick Kozal said Monday, however, that the city’s 2012 budget made changes that address some of OCTAVE’s concerns. The revenues from the license no longer are being used to fund economic development efforts by the chamber or the Downtown Neighborhood Association. The chamber in 2012 will receive significantly less funding than in 2011, and what funding it does receive will come instead from Elgin’s riverboat fund. The Downtown Neighborhood Association opted to receive its funding through the downtown tax increment financing district, which will give it great autonomy in its efforts downtown.

Monies generated by the license now will go directly into the city’s general fund, Kozal continued, to pay for small businesses programming that has yet to be defined by the City Council.

In terms of the criticisms of fairness, Kozal said Monday that of all the large businesses Keysor cited recently for not having applied for a business license, only Elgin Sweeper remains — the rest since have applied for and received their licenses.

Kozal reiterated that the charges of unfair enforcement reflect the city administration’s own restraint in enforcing the ordinance while waiting for direction from the City Council.

The city’s database of Elgin businesses lists more than 2,000, and in September, there were nearly 500 that had evaded the business license. There remain only about 400 unlicensed businesses, Kozal said.

“We recognize that there are businesses that have received notices from the city, and we haven’t taken further enforcement action to make them pony up the (license fee), but again, we are waiting for direction from the council on that because we want to be sure that is the way they want to progress. … We keep waiting for direction.

“It’s not like anybody’s fallen through the cracks,” he continued. “We know who’s not signed up.”

Kozal also responded to charges that the ordinance could be imposed upon hobbyists and virtually any kind of home business. He said such claims are false.

“We’re not trying to regulate your hobby,” added Elgin management analyst Aaron Cosentino.

In terms of home businesses, Kozal said, a business license would not be required unless the home business is required by ordinance to apply for a conditional use permit as a “conditional residential occupation.” The requirements for that permit, Kozal said, focus on the impact a home occupation might have on a neighborhood — such as visits to the home by customers, clients or employees, or the traffic associated with a home day care facility.

Consequently, Kozal said, a person with a home office, for example, would not be required to get a business license unless he or she met such conditions; the same would be true of an artist or a hobbyist.

“If we don’t have you in our system as being a conditional residential occupation, you’re not getting notice from us that you need a business license,” Kozal said. “It’s defined in the zoning ordinance … it defines the different criteria …”

Once the city staff receives direction from the council, Kozal said he anticipates that enforcement of the business ordinance will begin in earnest.

Kozal said the city staff would review the ordinance with the City Council on Wednesday and ask for direction on enforcement of the business license.

The ordinance was adopted by the City Council in late 2009 and implemented in the summer of 2010. The license originally was intended to generate funding for economic development efforts after the city eliminated its own economic development department during budget cuts. The city initially intended to use the revenue to pay the Elgin Area Chamber of Commerce and the Downtown Neighborhood Association to conduct economic development efforts on behalf of the city, as well as to document and track Elgin’s business community.

But the revenues from the license never met expectations. License fees are based on square footage, ranging from as little as $35 for a business with 999 square feet to a maximum of $595, for a business with greater than 40,000 square feet. City officials had hoped it would generate $535,000 a year, but it fell far short of that, generating just $275,000 in 2010 and $268,000 in 2011.