After a year, Prescott has licensed 3,826 businesses
Second phase involves visiting businesses to ensure compliance
As the first year of requiring Prescott businesses to be licensed comes to a close, the city is nearing the 4,000-license mark.
That is still far from full compliance, but based on earlier estimates by the city, it likely exceeds the half-way point.
Budget and Tax Manager Lars Johnson reported to the Prescott City Council this week that the city had issued 3,826 business licenses as of Monday, Nov. 13.
The total is up by nearly 1,000 from the 2,858 that Johnson reported to the council in June.
In the early stages of the process, the city had estimated the total businesses operating in Prescott at about 10,000. But Johnson has noted that the original estimate included about 3,000 residential rentals — a category that the City Council has since exempted from the business licensing.
Based on the possible 7,000 total remaining businesses, Prescott’s compliance would now stand at about 55 percent.
But Budget and Finance Director Mark Woodfill cautions that any totals at this point are very rough estimates.
“We have just started canvassing,” Woodfill said, referring to the process of in-person surveys of local businesses to determine if they are licensed. He explained that a city employee recently began the process of walking through the downtown area to do the canvass.
Citywide, the process could take six months or longer to complete, Woodfill said. But at that point, the city expects to have an accurate count of total businesses.
Meanwhile, Woodfill said, “I think we’re getting pretty good response.”
Johnson told the council that the city has gone through a number of steps to get compliance. Among the steps in the first phase were: three mailed notices to all tax-license holders; a flyer with utility bills; social media postings; and press releases and public service announcements.
The second phase, which just got underway, involves the canvassing of neighborhoods.
Many of those who have yet to comply are either unaware of the program, say city officials, or assume that the required TPT (transaction privilege tax) sales tax registration amounts to a business license.
“The most common misconception we see is that all these years, they thought they had a business license (through the TPT),” Johnson said.
While that tax was previously handled by the city, it became a function of the State of Arizona in December 2016.
The new business license program was approved by the City Council in May 2016, and it went into effect on Jan. 1, 2017.
Now 11 months in, the program got its one-year review by the council on Tuesday, Nov. 14.
City Manager Michael Lamar pointed out that the council had asked that the program be brought back for review after a year.
With the review, Lamar said city staff is suggesting changes that would involve “tweaking around the margins.”
For instance, Johnson outlined a number of recommendations for changes on: safety inspection fees; non-profits exemptions; vacation-rental notification to neighbors; and vacation rental inspection fees.
While council members voiced support for some of the suggested changes, they debated several others.
The suggestion that the city exempt all nonprofit organizations from the business license except those that regularly engage in commercial activities generated the most discussion, with council members maintaining that all nonprofits should be treated the same.
“I didn’t vote for this thing,” Councilman Steve Blair said of the business license program. “This is the murky mess I knew we’d get into. Everyone should be on this thing. If we’re going to start picking and choosing, I think the whole thing is a waste.”
Several other council members agreed, and suggested that all nonprofits that do business with the public and have a physical location should be subject to the business license.
Council members also questioned the recommendation to reduce the vacation rental inspection fee from $450 to $40 and reduce the frequency of the inspection.
Mayor Harry Oberg maintained that the rentals, which have people coming and going frequently, should have regular inspections.
“The safety aspect is one I’m a little concerned about,” he said. “It seems like when you have people in and out on a regular basis, you need safety inspections.”
The council appeared to lean toward reducing the inspection fee for vacation rentals to $40 per year, but requiring them on an annual basis.
This week’s discussion was a study session, and no vote took place. Johnson said the matter likely would be back before the council for the Nov. 28 voting session, including the changes suggested by the council this week.