DATE: February 21, 2023
TO: Honorable Mayor and City Council
FROM: Jason Kruckeberg, Assistant City Manager/Development Services Director Lisa Flores, Deputy Development Services Director
By: Alejandra Smith, Acting Business License Officer
SUBJECT: RESOLUTION NO. 747 9 UPDATING THE CITY’S BUSINESS LICENSE
FEES TO REFLECT THE CHANGES IN THE CONSUMER PRICE INDEX (“CPI”) FOR 2023
CEQA: Not a Project
Recommendation: Adopt
SUMMARY
The City’s Municipal Code allows for an annual increase in business license fees each year to accommodate cost of living increases. In practice, however, business license fees are adjusted every several years to be consistent with the cost of providing services and to account for economic conditions. Due to recent cost-of-living adjustments, the applicable business license fees should be increased by 7.6% to reflect the change in the Consumer Price Index ( “CPI”) and to recover the cost s to process applications . It is recommended that the City Council adopt Resolution No. 7479 updating the business license fees for 2023.
BACKGROUND
Pursuant to Government Code Section 53750, the City Council has the authority to increase taxes and fees and make changes pursuant to a CPI adjustment formula.
Arcadia Municipal Code Section 6220.1 allows for the adjustment of business license fees on January 1 of each year to reflect changes in the Consumer Price Index ( “CPI”) from the previous October. However, it has been the City’s practice to only update the fees occasionally, to keep costs as low as possible for local operators . The business license fees the City does maintain cannot exceed the actual cost to process the applications nor are they adjusted without consideration of economic conditions such as recessions and other pressures on local businesses.
The last time the business license fees were updated was in 2019 , and prior to that , in 2015. Fee increases have not been proposed since 2019 in large part from the COVID- 19 pandemic. Given that the cost of living has increased significantly in the past few
Resolution No. 7479 – Business License Fees Update
February 21, 2023
years, the fees will be reviewed on an annual basis moving forward to assess cost recovery and keep pace with inflation . Incorporating an annual review and potential changes will help avoid any drastic and unplanned changes for Arcadia businesses.
DISCUSSION
The Arcadia Municipal Code requires that the City compute the changes to the CPI for All Urban Consumers for the Los Angeles -Anaheim-Riverside metropolitan areas. This provision of the Municipal Code allows the business license fees to keep pace with increased costs for services without having to conduct an entire study each year. Based on the CPI reflected from October 22, the year-over-year increase is 7.6% . Thus, all relevant fees will be adjusted using this figure.
Resolution No. 7479 ( Attachment No. 1), includes an exhibit that provides the current business license fees and the new fees including the proposed increase of 7.6%. These increases are fair and reflect the cost of doing business. It is not anticipated that these increases will be a detriment to new business start-ups, renewals of existing licenses, or the number of applications received. Additionally, as part of recent discussions with the City Council, and report s from the Citizen’s Financial Advisory Committee, it is understood that the City would like to recoup all relevant costs for the provision of City services. As such, the Development Services Department will review the CPI each year and apply adjustments as they are warranted and as the Code allows.
ENVIRONMENTAL ANALYSIS
The proposed action does not constitute a project under the California Environmental Quality Act (“CEQA”) Section 15061(b)(3) because it can be seen with certainty it will have no impact on the environment. Thus, this matter is exempt under CEQA – refer to Attachment No. 2.
PUBLIC COMMENTS/NOTICE
A public hearing notice was published in the Arcadia Weekly on February 9, 2023. As of February 17, 2023, staff did not receive any public comments on this project.
FISCAL IMPACT
By recovering more of the costs to provide these services, the net impact to the General Fund is expected to be positive and generate a slight increase in revenue. For example, the annual revenue anticipated from Business License Fees for the current Fiscal Year is $1,180,000. It can reasonably be estimated that the fee increase proposed would increase this budget number by 7.6% or add $89,680 in revenue.
Resolution No. 7479 – Business License Fees Update
February 21, 2023
RECOMMENDATION
It is recommended that the City Co uncil adopt Resolution No. 7479 updating the City’s business license fees to reflect the changes in the Consumer Price Index (“CPI”) for 2023.
Attachment No. 1: Resolution No. 747 9 with Business Fee Schedule – Existing and Proposed Fees
Attachment No. 2: Preliminary Exemption Assessment
Attachment No. 1
Preliminary Exemption Assessment FORM “A”
PRELIMINARY EXEMPTION ASSESSMENT
1. N ame or description of project: City of Arcadia Business License Fee s Up date to reflect the changes in the Consumer Price Index (CPI) for 2023
2. P roje ct Location – Identify street
addr
ess and cross streets or
attach a map showing project site
(
preferably a USGS 15’ or 7 1/2’
topographical map identified by
quadrangle name):
Citywide
3. E ntity or person undertaki ng
pr
oject:
A.
B. O ther (Private)
(1) N ame City of Arcadia
(2) A ddress 240 W. Huntington Drive
Arcadia, CA 91006
4. S taff Dete rmination:
The Lead Agency’s Staff, having undertaken and completed a preliminary review of this project in ac
cordance with the Lead Agency's "Local Guidelines for Implementing the California Environmental Quality Act (CEQA)" has concluded that this project does not require further environmental assessment because:
a. T he proposed action does not constitute a project under CEQA. b. T he project is a Minister ial Project.
c. T he project is an Emergency Project .
d. T he project constitutes a feasibility or planning study. e. T he project is categorically exempt.
Applicable Exemption Class: 15301(a) – Class 1 (Use of an existing facility) f. T he project is st atutorily exempt.
Applicable Exemption:
g. T he project is otherwise
exempt on the following basis:
h. T he project involves another public agency which constitutes the Lead Agency.
Name of Lead Agency:
D
ate: F
ebruary 1, 2023 S
taff: Li
sa Flores, Deputy Development Services
Director
Attachment No. 2