02-03-1998 - Review of Business License Administrative PoliciesCity of West Covina
r Memorandum
To:
FROM.:
SUBJECT:
AGENDA
ITEM NO. H-1
DATE February 3, 1998'
® PRINTED ON RECYCLED PAPER
City Council and City Manager
Finance Department '
of Business License Administrative Policies
SUMMARY: For the past 20 years, The City of West Covina has not required a
business license for companies which work only for the City. This
non -codified administrative policy has been reviewed by staff and
can be modified; extended or removed at City Council's direction.
During the 1970s, the City adopted an administrative policy to exempt companies
doing business only with City from obtaining a business license. The policy is
predicated on the assumption that the cost of the business license would be
passed through to the City in the form of higher fees for services.
SUMMARY
At the request of the City Council, the Finance Department conducted a survey of
other local cities, determining that only Baldwin Park, Monrovia and West Covina
have similar policies to waive business licenses. Other East San Gabriel Valley
Cities do require all companies doing business within the City to be licensed.
Contractors, doing public works projects within the City have been required by
the public works department to obtain business licenses. We have reviewed
several larger contractors and determined that such business licenses are issued
and current. Accordingly, the policy is not being administered consistently
throughout the City.
Should the City Council decide that business licenses should be issued to all
businesses doing business within the City of West Covina, the issuance of the
license can be coordinated through the accounts payable and purchasing
functions.
None of the Cities surveyed had any information to support an argument in favor
of or against requiring licenses based upon overall economics. Accordingly, the
fiscal Impact of licensing such contractors can not be firmly determined.
The City's previous presumption is that overall costs to the City'would increase
slightly. This presumption is based upon the theory that the cost of a business
license would not only be passed onto the City, but that the contractor would
add -on an administrative fee to the cost.
Should the City
businesses, it ci
general fund rep
Additionally, .cor
taxes.
incil opt to require licenses from the currently exempt
i benefit the general fund. The license fee would generate
ae, regardless to which fund the contract is charged.
ctors may not increase their fees to cover business license
Staff recommends, treating all businesses consistently. And further recommends
that the City Co I ncil revoke the non -codified administrative policy and require all
companies doing business within the City of West Covina to obtain a business
license.
Margie Tucker
Finance Directoi
13