HomeMy WebLinkAboutRPT 4 FARMERS MKT B L 01-17-94REPORTS NO. 4
i-17-94
DATE:
JANUARY 17, 1994
TO: WILLIAM A. HUSTON, CITY MANAGER
FROM: COMMUNITY DEVELOPMENT DEPARTMENT
-SUBJECT: REPORT ON FARMERS MARKET BUSINESS LICENSE REQUIREMENT
RECOMMENDATION
Pleasure of the City Council.
FISCAL IMPACT
Potential loss of business license fees. However, actual impacts
are undetermined at this time since it is hard to project the
number of vendors.
BACKGROUND
.;Mayor Potts at the regular City Council meeting on January 3, 1994,
requested that staff evaluate current City Business License
requirements as they pertain to the recently approved Farmers
Market ~t the vacant lot at the northeast corner of E1Camino Real
and Third Street. Review of Section 2511 et al indicates that all
~'businesses operating within the City obtain a business license.
First, persons doing business within the City but without an
established (fixed) place of business (contractors, vendors, etc.)
are required to pay $25.00 plus $10.00 for each employee. This
code would apply to persons who sublease space at a location and
who are not employed by the business owning or leasing the
location. Second, the business owning or leasing the property is
taxed as a retail operation and required annually to pay the
following sliding scale base estimated upon annual revenue.
1st Annual Revenue
$0 to 25,000
$ 25,001 to 100,000
$100,001 to 200,000
$200,001 to 300,000
$300,001 to 600,000
$600,001 and over
Tax
$ 25.00
40.00
50.00
60.00 ·
80.00
100.00
City Council Report
Farmers Market Business License Requirement
January 17, 1994
Page 2
Persons not employed and paid by the business owning or leasing the
property are required to obtain a separate business license as
described earlier. Business licenses are valid for one year with
amounts noted above amortized to reflect only the portion of the
calendar year that the business has operated in the City.
Lastly, there is currently a provision within the City's business
license code to exempt local farmers/growers from paying the
required tax for wholesale only.
DISCUSSION
The City of Tustin has the lowest business license tax. in the
County. Currently, the Orange County Farm Bureau operates in two
other locations within the County (Costa Mesa and Huntington
'Beach). Staff contacted both agencies and learned that Huntington
Beach considers the Farm Bureau as a business without a fixed place
or location. Each vendor participating in the Farmers Market is
considered an employee. The City of Huntington Beach required the
Farm Bureau to pay a base business license ($75.00 for this type of
business license in Huntington Beach plus $4.00 per vendor
totalling $139.00). In addition, the City of Costa Mesa does not
choose to separately tax the Farm Bureau since the Farmers Market
9dcurs on State property. However, each vendor is required to pay
a $25 vendors fee per year. Lastly, there is a Farmer's Market
operation in the City of Fullerton which is not associated with the
Farm Bureau. The City of Fullerton charges individual vendors at
this event $40 per week or $36 for two or more weeks.
Option 1 - Payment of Business Licenses as Currently Required
Staff assumes that the Tustin Farmers Market will begin with
approximately 15 vendors. The current code would require each
vendor to pay $25.00 plus $10.00 per employee. In addition, the
Farm Bureau would be required to pay a business license tax based
on their gross revenue from vendors (stall leases).
Option 2 -Require Farm Bureau to Obtain Sole Business License and
Vendors Would Be Considered Employees
Under this option the City Council would determine, as done in
Huntington Beach, that the Farm Bureau is a business without a
fixed business location in Tustin. The business tax would be based
on gross annual receipts on a sliding tax schedule. Since vendor
sales do not directly benefit the Farm Bureau, staff estimates that
the Farm Bureau's revenue generated from sales would require a
$25.00 tax to be paid to the City. As in the case of Huntington
Beach, vendors could be treated as employees with a $10.00 charge
per vendor which would be made by the Farm Bureau. Individual
vendors would be exempt from taxation.
City Council Report
Farmers Market Business License Requirement
January 17, 1994
Page 3
Option 3
Option 3 would be similar to Option 2. However, the City Council
could determine that no additional charge per employee (vendor)
would be required by vendor.
Staff would be prepared to respond to any direction provided by the
City Council.
DO: kd\CCREPORT\farmrsmk.do
Christine A. Shing~on
Assistant City MaNger