Abbotsford city hall is approaching business licence fees as another form of taxation, and that could get the city in legal trouble, says a local business owner.
Cameron MacKay is challenging the city to justify the increases in business licence fees that staff are proposing. He owns Valley Racquet Centre, which will see its fees rise $800. The licence for the adjoining Cheers pub will go from $540 to $7,000 – if he does not join the Bar Watch program. Cheers is not part of Bar Watch for “philosophical reasons,” he said. Being part of that program could lower his fee from $7,000 to $1,200.
“The fees have no basis in law,” he said, maintaining council should be able to show a relationship between rising fees and rising administration costs.
The province gives municipalities the power to administer businesses and to impose a fee to cover the cost of that administration. The fee is for regulation, and is not to be used as a tax.
MacKay has reviewed city reports relating to the fee increases. Nowhere did he find an examination of rising costs of administration, he said.
The minutes from the meetings refer to revenue from current business licences.
“Rather, when discussing the proposed increases, the report justifies them only by citing what other municipalities charge, and by discussing how much more money the city could collect by increasing them,” he said in a letter to council, sent in advance of Monday’s meeting.
He also cited two court decisions that found business fees must bear a reasonable relationship to the cost of providing the service that the fee is charged for.
That letter concludes by saying that the city’s fee increase bylaw could be successfully challenged in court.
Asked whether he would sue the city, MacKay responded: “We’ll consider our options.
“I would like the city to reconsider the bylaw.”
He has spoken with other bar owners, and all are angry.
“Most people are focusing on the fact they don’t think the increases are right. We don’t think it’s legal,” he said. “The city is trying to increasing its revenue without raising taxes.”
Several types of businesses would be hit with increases under the new fees. Most pay a standard fee which will rise from $120 to $140 per year.
In addition, there would be a new $3,000 fee for the Trans Mountain Pipeline, a cash machine fee of $140 for all ATMs at outlets such as convenience stores, and real estate licences would go from $120 to $500. Businesses of more than 1,800 square metres – such as MacKay’s gym – would see their fees rise from $240 to $1,000.
Shachi Kurl of the Canadian Federation of Independent Business was in Abbotsford in July to speak against the new fees at a city audit and finance committee meeting.
Local pub owner Paul Esposito has also spoken out against the fees, and MacKay echoed his comments. Since B.C. enacted the toughest drinking and driving penalties in Canada, allowing roadside suspensions, fines and cars to be impounded for drivers over 0.05, he said business has not been good.
“The bar business is tough everywhere since 0.05,” he said. “The bar industry is not a good place to be right now.”
Abbotsford Chamber of Commerce manager Alan Asaph said his group met with city staff to review the changes, and the city was responsive. The fee for liquor primary business licences was dropped from a proposed $1,500 to $1,200. The increase to real estate business licences was amended, so it would only apply to offices with six or more agents.
He said the city’s explanation for the fee hikes was it had been under-charging. The last business licence fee increases were 2007, when they rose four per cent overall. The chamber requested the city have more frequent, but smaller, increases in future.
According to the staff report council reviewed Monday evening, fees for business licences generated $894,000 in 2011. The proposed increases would raise that by approximately $150,000, which is included in the proposed 2012 budget.
Staff compared fees to neighbouring municipalities, and there is considerable variation. Mission, for example, charges $148 for all types of business licences. Chilliwack charges $1,000 for a liquor primary licence, while Langley City charges $4,457. In Richmond, a real estate office licence is $1,317, but in Langley City it costs $161.
At Monday’s meeting, council referred the matter back to staff for a review of the “cost recovery” aspect of the fees.
“I share some of your concerns,” Mayor Bruce Banman told MacKay, who was at the meeting.
Banman said he wouldn’t comment on the legality of the new proposed fees.