FROM:
Administrative Services
SUBJECT:
Title
Proposed Business License Penalty Fee Waiver for Crown Cedar Inc.
End
RECOMMENDATION:
Recommendation
Consider proposal to waive delinquency fee
End
COUNCIL GOALS:
• Operate in a businesslike manner by ensuring that the public debate is based on accurate information.
• Operate in a businesslike manner by correcting problems immediately.
DISCUSSION:
The City has engaged HDL to perform an audit of businesses operating in Fontana and verify these businesses are compliant on any required business licenses. An element of this audit is to notify any non-compliant businesses of the business license required and initiate collection of the necessary business license fees.
When a business is identified as being non-compliant for business license, they are requested to provide operating revenue for the prior 4 years. The business will then be assessed the appropriate licensing fees for that period of time. If, once notified and invoiced, the business chooses to remain non-compliant, the business is allowed a 30-day grace period to cure any outstanding license fee’s due the city. After 30 days the business will be assessed a penalty on their outstanding balance.
On 5/31/2023 Fontana based business Crown Cedar Inc. was identified by HDL as having rental income and was notified they were out of compliance with the city’s business license requirements. The business was notified again of this non-compliance on 7/13/2023 on 9/8/2023. On 9/12/2023 a representative of the business emailed HDL stating that Crown Cedar Inc. was owned by the same owner as Crown Technical Systems and did not feel an additional business license was required. The representative was notified that the income for Crown Cedar Inc. was rental income meaning it was operating in a different business category as Crown Technical Systems and therefore was required to apply for a separate business license.
Additional notifications were sent to the business between September 2023 and April 2024 - 3 penalty waiver notifications and six compliance notifications.
Once communication was established with the business the rental income for Crown Cedar Inc. was verified. Based on the declared revenue, cumulative business license fees for the prior 4 years were calculated at $7,742. Per Fontana Municipal Code Section 15-45. - Delinquency an additional penalty fee in the amount of $6,748.50 was assessed.
Per Fontana Municipal Code Section 15-40(h) extension of time for filing statement or application if assessed business license fees are paid within 30 days of issuance of the invoice the city will waive the penalty. Crown Cedar Inc. was initially invoiced on 4/4/2024. Calls were made to the business on 4/11/2024, 4/12/2024, 5/20/2024 and 5/23/2024 to ensure they were aware of the invoice. The calls were not answered, and voice mails were left.
The business owner sent payment on 5/30/2024 for the delinquent business license fees in the amount of $7,742, 56 days after the first invoice was sent.
Since the payment was not received within the 30-day grace period the penalty fee was assessed and the business was notified.
The business has requested a penalty fee waiver. Per Fontana Municipal Code, staff does not have authority to waive penalty fees for late payment on business licenses.
The fee paid to HDL for business license fee collection services is 40% of the invoiced amount. Therefore, HDL’s rate for the delinquent business license fee of $7,742 was $3,096.80 which was taken out of the payment made by Crown Cedar Inc. HDL’s rate for the penalty fee of $6,748.50 is $2,699.40. If the penalty fee is waived and not collected from the business, then the city will be paying the HDL fee from General Fund.
FISCAL IMPACT:
Loss of fees due HDL for the unrecovered penalty fee in the amount of $2,699.40.
MOTION:
Approve request to waive delinquency fee