The owners of commercial buildings who lease out space will not just have to buy business licenses in the future under a Decatur ordinance that has not been enforced in 21 years, they will also have to buy business licenses for past years, according to the city attorney.
Mayor Tab Bowling, who initially pushed for enforcement of the long-dormant ordinance, on Tuesday said he thinks it’s a mistake to enforce the ordinance retroactively but that he believes he is powerless to prevent it absent a council resolution.
Dianne Street Southwest resident David Smith said he and his wife, who have operated a small event center for six years, have already had to pay the new fees under the ordinance he did not previously know existed.
In early June, he said at a City Council work session Monday, the city approached him about the newly enforced license requirement and required that he get one.
“We went through the process," Smith said. "I went to get a business license. They said I had to buy a business license for every year that I’ve owned the building. I bought six business licenses that day, plus I had to pay a penalty for each business license I had previously. My question is ... are they going to make other business owners go back 21 years and buy business licenses? … Is everybody going to have to go through the same procedure?”
City Attorney Herman Marks said the ordinance will be applied with partial retroactivity, but not going back to 2000.
“We will not go back 21 years,” Marks said. “There’s a limit on the number of years you can go back. We would not go back 21 years.”
He said the city would require that business licenses be purchased going back five or six years.
Kyle Demeester, the city’s chief financial officer, said enforcement of the 21-year-old ordinance is new and the city is working to come up with a consistent plan on retroactive enforcement.
“We’re going to take a look and try to take the best approach that makes sense logistically from an administrative standpoint but at the same time hold precedent,” he said at the work session. “Revenue and Legal and Finance will all work together to come up with the best solution. At this time, I don’t have an answer unfortunately.”
Demeester has previously said that enforcement of the ordinance could bring in new annual revenue to the city of $918,750 to $1.44 million, although he stressed this was an estimate. Under the evolving approach to retroactivity, it could produce a one-time windfall several times that amount.
The previously unenforced portion of the 2000 ordinance says a license fee based on gross annual receipts must be paid for “renting or leasing real or personal property to others, including, but not limited to, automobiles, trucks, trailers, apartments, office space, commercial buildings, furniture and equipment.”
The license fee ranges from $75 a year for rentals or leases totaling less than $10,000 to $300 for leases totaling at least $80,000 in the previous year plus “1/20 of 1% of gross annual receipts in excess of $100,000.”
Council President Jacob Ladner told Smith the ordinance needs to be enforced fairly.
“It does need to be consistent. I hear what you’re saying and I agree with you,” he said.
Bowling on Tuesday said he would prefer enforcement beginning in January, with no retroactive application. The unfairness of his preferred approach, he said, is that some commercial lessors have been paying for business licenses all along while others have not.
“My view is we keep it simple. We’re thankful for those that have been paying it. For those who have not, more attention will be given effective in January 2022,” Bowling said.
He said that while he would prefer that commercial lessors not be required to obtain license fees for past years of noncompliance, he doubts he has control over whether the 2000 ordinance is enforced retroactively.
“If the council wants to do a resolution against the current (2000) ordinance, they can certainly do that I think,” Bowling said. “They have the ability to create a resolution. I can create a resolution and try to get council support that — now that I think about it —would say that we make that effective Jan. 1.”
Smith on Monday asked how he would be impacted if the city ultimately decides not to enforce the ordinance retroactively.
“You going to give me a refund?” he said.