Elgin studies whether to keep its business licensing — and fee
By Janelle Walker For Sun-Times Media October 10, 2013 12:26PM
Downtown Elgin businesses were granted a three-year exemption in 2010 from paying for a business license due to construction projects. Now there's a move among some councilmen to scrap the license program for all businesses. | Sun-Times Media file
Updated: November 12, 2013 6:22AM
ELGIN — A vote to do away with the city’s business licenses failed Wednesday, but the issue is set to come up again in the future before the city council.
Following a presentation by Assistant City Manager Rick Kozal on the history and use of funds from business license fees — first charged beginning Jan. 1, 2010 — Councilman Terry Gavin moved that the entire program be scrapped.
That vote failed 6-3, with council members Gavin, Toby Shaw and John Prigge voting in favor of ending the licensing program.
Other board members said they wanted more information first, such as how the city would replace funds earmarked for economic development.
Before the city adopted the business license fee, the council debated the idea and received input from the business community, Kozal said. The council voted unanimously at that time to add the licensing fee, he noted.
Originally, the fee’s revenue — expected to hit $250,000 in 2013 — went to the city’s public service agreements with the Chamber of Commerce and Downtown Neighborhood Association for economic development initiatives, Kozal said. In 2012, those fund were earmarked for small business economic development, he added.
The fees are based on square footage of the business and range from $35 to $595 a year.
However, collecting the fee allows Elgin to cull other data about businesses in town — such as the types of businesses operating here, the square footage, number of employees “and other generalized info for economic development programs,” Kozal said.
It is that information that council members said they didn’t want to lose if the licensing program disappeared.
“We’d be one of three or four communities out of 300 that would not have that kind of data,” said Mayor David Kaptain. “It would interfere with economic development for us.”
Without the business license program — or an equivalent — Elgin would not be able to answer simple questions for other businesses looking to locate here. “How many restaurants in Elgin? We can’t even answer the question” without a registration process, Kaptain said.
It is important to fund economic development programs if Elgin wants to keep growing and expand its property tax and non-tax income, Kozal said.
Figuring out what businesses are here — and which have or have not complied with the licensing fee — has been difficult. The original list of companies purchased from a database provider had a 30 percent inaccuracy rate. City staff compared that list to commercial water bills; but if a landlord pays water and not the business itself, those may be missed, according to Kozal.
“I think it is important that we have accurate data of the businesses here. It helps with attracting additional businesses to the community,” said Councilwoman Anna Moeller. But, she added, she is not “wedded” to the fee structure either.
If the $250,000 in economic development funds are taken away, she doesn’t want to see property tax payers footing the bill either, Moeller said.
“I have a hard time saying yes or no cutting (that) from our budget instantly. What are the alternatives to replace that fee?” she asked.
City staff said they would come back with a complete report for a future council meeting.