Cost of doing business set to increase in SSLMay 08, 2023 02:31PM ● By Zak Sonntag
The city is considering raising business fees for places like Bonwood Bowl, the first fee change in 12 years. (Zak Sonntag/City Journals)
The cost of doing business in South Salt Lake is set to increase as the city appears poised to raise business fees by a substantial margin.
The move is being prompted by a Zions Public Finance study which showed current licensing fees don’t cover the expense of municipal services utilized by businesses operating in the city.
The decision would mark the first fee change in 12 years.
Yet even as city leaders conceded the need to lift fees, they are delaying a decision over concern that fee hikes will ding the bottom line of local companies and worry that moving ahead without input will damage relationships with the business community—relationships that some councilmembers say are already in poor standing.
“I’m not opposed to increasing the fees. But I’m wondering if this can be part of a larger conversation on what we’re doing [for our business community] because right now those businesses don’t really see support from South Salt Lake,” said at-large Councilmember Natalie Pinkney, speaking during a March South Salt Lake City Council meeting where she offered anecdotes of local entities lamenting a lack of city support during All-Star Weekend.
Completed at the end of 2022, the Zions Public Finance study analyzed SSL’s direct and indirect costs associated with a range of different business classes, finding that current fees fail to cover administrative costs along with what are known as disproportionate fees, namely calls for police and emergency services.
The city was surprised to discover that five specific business classes—including grocery and convenience stores, bowling alleys and movie theaters—have driven up city expenses significantly.
For example, the current annual fee exacted on a bowling alley under city ordinance is $1,354, but Zions identified a disproportionate cost of $8,852, expenses that stem mostly from the alley’s calls for emergency services.
Todd White, general manager of Bonwood Bowl, explained the alley often relies on paramedic support from nearby fire authority.
“We have a lot of senior citizens that bowl here during the day. It’s nice having a fire department a block away. If someone has trouble paramedics are here usually within two minutes,” he said. “The paramedics are here seems like at least twice a month. And they do a great job.”
White, whose grandparents opened Bonwood in 1957, says the alley has developed a good relationship with the city through programs like “Bowl with a Cop” where police officers bowl with community members and that he’s pleased with the level of service received from the city.
He said he is not looking forward to a fee hike, but says the business is doing well and can weather the added expense.
“I guess it’s kind of understandable. But obviously no one likes their rates going up,” he said, adding that it is tougher to swallow for coming on the heels of recent property tax hikes.
The disproportionate costs are even higher for city’s largest grocery store, Win Co, where calls for police service cost the city a whopping $140,000 in a recent fiscal year.
‘Cost of being a city’
The Economic Development Department drafted a proposal that recoups costs overtime: the plan would double the current fee rates and include a built-in 3% annual increase for consumer price index adjustments.
During an April meeting, the council agreed with the proposal in principal, but hesitated to move forward with a vote fearing businesses would react poorly.
“If we pass this tonight I think we’re jumping the gun,” said Councilmember Corey Thomas, who represents District 2 on the city’s west side. “We’re a very business oriented city and I would hate to pass something so quickly that effects small businesses. I would like to see more outreach and let our businesses have an opportunity to tell us their thoughts.”
The body agreed with Thomas’ statements, but District 4’s Portia Mila offered a counterpoint and said representatives should not be naive about what to expect from outreach.
“I’m not opposed to talking about this more, but if we’re doing outreach nobody is going to say, ‘I’m totally for it.’ Everyone is going to say no, especially after having their property taxes raised,” Mila said. “So that’s not a good gauge. I don’t know what the answer is, but I don’t know that outreach is it.”
Councilmember Pinkney responded by emphasizing her concern for small business owners who are people of color.
“No one is going to agree with this, but my question is will it devastate your business. And what percentages of business will it devastate and will those be disproportionately people of color?” Pinkney said. “We don’t have that information yet.”
The discussion also invited broader points on the city’s pro-business philosophy.
Councilmember Shane Siwik, who in March called some of the fee increases “exorbitant,” was cagey about protecting the city’s pro-business reputation, and suggested there may be justification to absorb losses in order to maintain a vibrant community.
“We talk about the cost of doing business, but I think part of this is the cost of being a city if we want some of these facilities,” Siwik said, referencing the Parker Theater and Edison Theater. “I think we’re blessed to have an entity in the city that does plays.”
Siwik recapitulated the point again during the April meeting.
“No one’s going to up and leave over a couple hundred dollars, but what’s the message we’re sending out to recruit new businesses,” Siwik said.
As an example, the current annual business fee for a restaurant is $432; the proposal would see that raise to $829 with a renewal of $720.
In either case the mathematics don’t go away, as councilmember LeAnne Huff mentioned, saying that if the fees where not increased the council would need to start asking, “What are we going to cut from other budgets.”
The Community and Economic Development Department say the fee increases are reasonable.
Economic Development Director Jonathan Weidenhamer told the council the proposed fees are unlikely to push business away in part because they are comparable to those in sister cities like Midvale and North Salt Lake.
Weidenhamer also noted updating fee schedules will allow the city to lower license renewal fees for some entities.
Officials admit that unique neighborhood factors and external variables mean specific business fees will never perfectly match a city’s expense for services and that sometimes determining rates can “be more art than science,” one official said.
Albeit the Zions’ study gives decisionmakers a sense of how to determine fees in a more targeted way.
The council for now will push the decision off as it determines how to allay the business community.
Councilmember Sharla Bynum reminded the body it has a tendency to stall hard decisions, but that doesn’t make them go away.
“The last time we looked at our licensing fees was over 10 years ago, so again we find ourselves in this situation where…we’re very behind,” Bynum said. “Staff salaries have gone up, we’ve hired new staff, but this is not reflected in our old fee schedule.” λ