Memorandum

City of Lawrence

City Clerk’s Office

TO:	Cynthia Wagner, Assistant City Manager
FROM:	Jonathan Douglass, City Clerk/Assistant to the City Manager
CC:	David L. Corliss, City Manager Cynthia Wagner, Assistant City Manager
DATE:	February 11, 2013
RE:	Solicitor and Transient Merchant License Fee Review

Fee Review and Recommendation to Adjust Solicitor License Fees

City Clerk’s Office license/permit fees are all on a 5 year review cycle. I have reviewed the solicitor/peddler license fee in accordance with the city’s fee review policy. The fee is governed by two sections of the city code, and is currently set at $50 per person per year. This is far below the cost to the city to issue the license, and far below the fee of many other cities that require solicitors/peddlers to be licensed.

Staff recommends that the solicitor/peddler license fee be adjusted to $250.00/yr. This is close to the true average cost of managing each license. The direct costs to the City Clerk’s Office are about $165 before adding general city overhead, the cost of the background check and Police Department staff time spent on each license. This fee would also be in line with what many other cities in Kansas charge for this type of license. Please see the table below for a more in depth review of the fee, in accordance with the city’s fee review policy.

No changes are recommended for transient merchant licenses, which are regulated by the same sections of the city code, but are issued on a very infrequent basis. Staff recommends that the transient merchant license fee stay at $50 for a 5 day license.   

Area	Review Item	Response
Cost	How much does it cost the City to provide the service?	It costs, on average, at least $165 per license/permit to manage the licensing/permitting process. This calculation is based on the City Clerk’s Office budget, the total number of licenses/permits issued, and the approximate overall amount of staff time spent on licensing/permitting. This calculation is certainly an underestimate of the cost, because it does not include overhead costs such as Legal, HR, Risk Management, Building Maintenance, utilities, health insurance, or various other costs that are not charged directly to the City Clerk’s Office budget. Solicitor/peddler licenses are some of the more time intensive licenses to process because they require background checks by the Police Department and the creation of photo IDs for approved licenses.
Service, purpose, users	What is the service?	Issuing business licenses to solicitors/peddlers.
	Why does the City provide the service?	To allow, with reasonable regulations, the business activity of going door to door selling goods or services.
	Who uses the service?	Businesses that go door to door selling goods or services.
Cost recovery goal	How much of the cost of service is subsidized by general tax revenue?	Currently, based on the calculation explained in the “cost” section of this table, general tax revenue subsidizes at least $115 of the $165 cost of managing each license, or nearly 70% of the cost. When the cost of the background check and the Police Department staff time is factored in, the public subsidy is even higher.
	How much of the cost does the City intend to recover through fees and charges?	100%.
Level of use or demand	How many people or businesses use the service?	In 2012, there were 171 solicitor licenses issued. 77% of the companies were from out of town and 51% were from out of state. The three companies whose employees received the most licenses were out of state companies selling alarm systems or magazines (see attached breakdown of licenses issued).
Comparisons	How do the City’s fees compare with other cities or with private businesses?	Research of peer communities indicates that the license fees for solicitors are significantly higher in other communities. Not all of our peer communities have such a license (some prohibit solicitors entirely and some allow them without a license) but staff identified the following cities with comparable licenses and their fees: Manhattan: $15/day or $150.00/yr, plus $20 background check fee. Topeka: $140.00/yr Wichita: $250.00/yr Salina: $40.00/yr A recent survey by members of CCMFOA (City Clerks and Municipal Finance Officers Association) of Kansas found that many cities license solicitors on a per day basis, and a few on a monthly basis or some other term. Licenses issued on a per day basis are much more expensive, per day, than a license in Lawrence – some up to $100/day.
Other fee reviews	When did the City set the current rate?	09/13/2011, Ord 8664
	When did the City last review the fee?	09/13/2011, Ord 8664
	When does the City plan to review the fee next?	No later than December 31, 2018.
Authority	What part of the City Code or other legal authority guides the fee?	City Code sections 6-108.16, 6-804
Fee Collection Method	How will the City collect the fee.	The City Clerk’s Office accepts cash, check, or credit card payment at the time of license application.

ACTION:    Adopt on first reading, Ordinance No. 8843, amending Sections 6-108.16 and 6-804 of the City Code regarding solicitor/peddler license fees.