Even as the New Year closes out the City of Prescott’s first year of business licenses, it also kicks off a new phase: Renewal for the thousands who have already signed up.
One year ago, the city’s first business license program went into effect.
Since the Jan. 1, 2017 effective date, more than 4,000 businesses, sober living homes, and vacation rentals have applied for the new license.
Among the tasks for the city and area business owners now is to renew those licenses, which come with a $35 annual fee.
City Budget and Finance Director Mark Woodfill and Tax and License Representative Jennifer Wiita say a notice was sent out to registered businesses in November as a reminder that the city license is an annual requirement.
About 1,200 businesses have already responded to that call to renew, they say.
Remaining businesses have until the end of January to get licensed before facing a penalty.
Woodfill explained that the city code requires a $17.50 penalty for businesses that do not register by the end of January.
That penalty was waived throughout 2017 because the license was new, and the city was focusing on getting out the word about it.
“Our push has been to inform people; we don’t want to be punitive,” Woodfill said.
He added, though, that his department plans to enforce the penalty in 2018. For those who do not get licensed by Jan. 31, 2018, the delinquent license amount will increase to $52.50 (from the $35 normal fee).
Updated numbers from the city show that 2,547 businesses within city limits applied for a business license by Dec. 28, while another 1,342 businesses outside city limits applied as well.
In addition, 50 sober living homes applied during the same time period, and 97 vacation rentals applied. In total, the city received 4,036 license applications in 2017, and has issued 3,987 licenses. (The remaining 49 are still awaiting the required inspections.)
For newly licensed businesses, a $40 inspection is required. After the first year, Woodfill said the city’s code enforcement and fire departments determine when additional inspections are needed.
While the number of applications continued to rise throughout 2017, it still is well below the 7,000 or so businesses that are estimated to be operating in Prescott.
In the early stages of the process, the city had estimated the total businesses at about 10,000. But that estimate included about 3,000 residential rentals — a category that the City Council later exempted from the business-license requirement.
To improve compliance among unlicensed businesses, the city began canvassing the community in early October to inform businesses in person that the licenses were required.
Wiita, who is conducting the canvassing, says she visited hundreds of businesses in October and November.
She explained that she walks or drives around the city, and uses a series of maps and information on a tablet to determine if businesses have applied for a license.
If not, she stops in to let the owners know about the license requirement, and to drop off a packet of information, including a brochure, a “notice of business license requirement,” and a business-license application.
Often, Wiita said, business owners are surprised that they need to get a license. “Mostly, they’re in shock because they’re not aware of it,” she said, noting that some owners have confused their state sales tax license with the city business license.
Although a few owners have reacted with anger, calling the license fee another city tax, Wiita said others have asked to apply right away.
Once notified, the businesses have 10 days to comply before Wiita will send out the first of three reminder letters.
Most businesses have responded to the first letter, she said, noting, “I’ve never had to go to the third letter.”
Woodfill said his department is working to carry out the wishes of the City Council, which approved the license in 2016.
“We’re just trying to get people licensed,” he said. “It was adopted by the council, and we need to enforce it.”
The city is urging businesses to complete the application form online (www.prescott-az.gov/business/license), if possible.