The conversation on whether or not to implement a city business license appears to have petered out — at least for now.
The Economic Development Advisory Commission spent approximately the past six months, since the city council adopted a resolution in April directing the EDC to investigate the concept of a city business license, looking into the merits of establishing a license program and what such a thing would accomplish.
The end result, overall, is that a city business license program isn’t necessary.
In an Oct. 8 informational memorandum provided to the council at their last regular meeting on Monday, Oct. 14, the EDC provided responses to several points of discussion that the council had previously directed them to investigate on the subject of business licenses.
Regarding the “proper” level of license requirements, the EDC holds that the existing state business license and Kenai Peninsula Borough sales tax registration is adequate.
Implementing a city business license would also not ensure any safety aspects. According to the memo, that falls under the purview of a state fire marshal review and/or a municipal building inspection program with an occupancy certificate — something that Homer does not currently have.
Potential costs for the city to administer a licensing program would include $34,000 for the first year and $19,000 for subsequent years, with no enforcement included. Active enforcement of eight hours per month, the memo states, would include an additional $5,000 per year. Enforcement capability would also depend on staff availability.
“It is very difficult to enforce existing regulations due to low staffing,” Community Development Director Julie Engebretsen wrote in the memo. “If we’re not able to adequately enforce existing … laws, how would we enforce a new regulation in the form of a business license?”
One of the concerns that arose out of the many discussions held over the past months, according to the memo, regarded businesses — particularly those that operate out of the Homer Harbor — operating in Homer but not paying sales tax.
Commissioners Nicole Arevalo and Jonathon Young moved at their last regular meeting on Tuesday, Oct. 8 that the city council should investigate harbor-specific options “to accomplish the goals of solving problems identified” regarding non-Homer businesses operating out of the harbor, rather than pursuing a general business licensing program.
As part of the process, the EDC was also directed to conduct outreach with the Homer Chamber of Commerce and business community. The memo notes that chamber staff received “negative comments” from the business community at the chamber office.
Regarding other pros and cons of implementing a city business license, the EDC found that a license program could provide public information on where all local business operations are located. The State of Alaska currently requires all entities conducting business in the state to have a license, but the state’s system does not list every physical location of a business — just one location is listed.
However, the EDC also found that overlap exists between the state licensing program and the proposed city program. The memo called the proposed city license an “administrative and cost burden for businesses and the city,” and said that it could become a barrier of entry to businesses wanting to operate in Homer — a “gatekeeper on businesses with no oversight.”
The EDC’s current recommendation to the city council is to not create a city business license program.
Find Memorandum CC-24-207 in full at www.cityofhomer-ak.gov/citycouncil/city-council-regular-meeting-322.
The next Economic Development Advisory Commission meeting is scheduled for Tuesday, Nov. 12 at 6 p.m. in the Homer City Hall Cowles Council Chambers.
