New registration requirement raises questions among business, rental owners

City: Businesses need to register

Soul Ride co-owners Kate Phelan and Cina McConaughy this week go through the paperwork they received after paying for the new City of Prescott Business License.

Photo by Les Stukenberg.

Soul Ride co-owners Kate Phelan and Cina McConaughy this week go through the paperwork they received after paying for the new City of Prescott Business License.

PRESCOTT — As of Jan. 1, about 10,000 local businesses, rental owners, and service professionals faced a new requirement: To register as a business through the City of Prescott.

After conducting multiple public meetings on the topic throughout early 2016, the Prescott City Council approved the community’s first-ever business license program in May 2016.

Key business license details

• Prescott business-license registration is available online at: http://www.presco...

• The annual fee is $35, and most businesses in city limits also are subject to a $40 annual fire inspection fee.

• The business license registration is due on or before Jan. 1 of each year, and businesses are considered delinquent if the fee is not paid annually by the last business day of.

• Because the license is still in the implementation stage this year, city officials said the deadline would be extended until Feb. 28, 2017.

• The annual fee ($35) is subject to a 50-percent penalty if unpaid within 30 days of beginning business in the city.

• It is illegal to continue to engage in business in the city without a business license.

• Violation of the ordinance could lead to the city seeking an injunction in Yavapai County Superior Court enjoining the violator from conducting business in the city.

The ordinance was to become effective Jan. 1, 2017, and the council approval set off months of preparation by city employees to gear up for the implementation. Prescott Budget and Finance Director Mark Woodfill said getting the new application software online by Jan. 1 required “hundreds of hours of set-up.”

Throughout the review and approval process, the business-license proposal generated significant controversy in the community, along with accompanying media coverage.

Still, a number of area business and rental owners reportedly were unaware of the pending new requirement until they received a notification in late December/early January in their sales-tax mailings from the city.

The city has received many telephone calls over the past week about the business license program, Woodfill said, noting that some of the callers have indicated that they were unaware of the requirement for the license.

Budget and Tax Manager Lars Johnson, who has been fielding many of the questions, said the questions and complaints are coming largely from owners of rental properties, who have questioned the requirement for a business license for their properties.

Johnson explained that the ordinance requires owners of residential and commercial properties to acquire a business license. Complicating the issue somewhat is a council-approved section, which allows owners of three or fewer properties to get just one license, while owners of four or more must acquire one license per property. Also, if the rental units have the same address — for example, a four-plex — just one license would be required.

On Dec. 29, 2016, the city sent out a news release, reminding the community of the need to begin registering for the business license.

Quoting from the ordinance, the release stated: “Effective Jan. 1, 2017, the City of Prescott requires all persons who engage in any business, occupation, or profession within the city to obtain an annual city business license.”

It added that the annual license fee would be $35, while a $40 annual fire inspection fee would also apply for most businesses in city limits.

The ordinance includes a number of exceptions, such as: schools; churches; governments; casual activity or sales (for example: personal auto or yard sale); and employees of licensed businesses.

Woodfill said the city is asking that businesses go online at http://www.prescott-az.gov/business/license/ to complete the application for the new license. While the official deadline in the ordinance is Jan. 31, officials say the city would extend the deadline to Feb. 28 this year, because of the implementation process.

Although business owners may also go to Prescott City Hall to fill out the application, Woodfill said, “It’s a lot more efficient to do it online.”

Currently, the city is implementing the program with no new staff. Although some staff time is expected to be freed up when the state of Arizona takes over sales tax reporting later this year, Woodfill said that is still several months away.

The total number of Prescott businesses has been estimated at 10,000. Woodfill notes that about 8,500 of those are known to the city through their sales tax licenses. But, because the city’s business license also applies to categories that do not have sales-tax licenses — such as attorneys, accountants and doctors — the total is expected to be higher.

The city opted to use software through the Accela company because it was already being used by the public works and community development departments, Woodfill said.

City Manager Michael Lamar said Friday, Jan. 6, “Anytime you roll out a new system, there are kinks in the system, and there have been some.”

Woodfill added that the city is “hopeful that as we fully implement the program, it will improve.”

Meanwhile, the city is also taking steps to get the word out more fully about the need to register. Informational fliers are going out in municipal utility bills throughout January, as well as in the sales-tax mailings. In addition, the city has posted the information on its Facebook page.

“We are doing a lot of outreach in January,” Woodfill said.

So far, he said a number businesses have registered, although he did not have a total at this point in the implementation.

The 2016 approval of a business license program came after years of consideration by the city. The ordinance passed in May 2016 by a 4-3 City Council vote (Councilmen Jim Lamerson, Greg Lazzell, and Steve Blair voted against it).