SR-6-P (38)
CARS: BFM: CAC:slfjBUSINESS.LIC
Council Meeting, July 9, 1991
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JHL 9 1991
Santa Monica, Cal~rornia
To: Mayor and City Council
From: city staff
Subject: Business License Fees for Civic Auditorium Lessees
INTRODUCTION
This report recommends an exemption from business license fees,
police permit fees, (except for secondhand sale shows) and
fingerprinting fees for civic Auditorium lessees. Continuing the
practice of charging these fees places the civic Auditorium at a
competitive marketing disadvantage.
BACKGROUND
Resolution 3579 (CCS) adopted by the city Council on February 28,
1967 established rules and regulations for the administration of
the Santa Monica Civic Auditorium including the determination of
rentals charged for the use of the Civic Auditorium. Section 8 (b)
of the resolution specifically states that the rental of the Civic
Auditorium includes "all municipal permits or licenses, except
police permits and permits for charitable solicitions...1I
Santa Monica Municipal Code section 6220 entitled "Itinerant
Vendor," adopted by Ordinance number 561 (CCS) on June 12, 1962,
requires a business tax to be charged to people who engage in
temporary business within the City, including those who utilize the
Santa Monica Civic Auditorium as a business venue.
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A memo addressing this conflict was issued by the city Attorney,
(memorandum opinion number 85-127). It concluded that City Council
would have to adopt an amendment to Municipal Code Section 6620
(now superseded by 6053-B) to exclude the Santa Monica civic
Auditorium events from the City's Business License Ordinance.
DISCUSSION
The imposition of the business license fees puts the Civic
Auditorium at a distinct marketing disadvantage. A comparison of
City of Santa Monica fees to those in Pasadena, Los Angeles, Long
Beach and Anaheim shows that a promotor booking a typical 3-day
event would pay a business license fee of $450.00 in Santa Monica,
$150.00 in Anaheim, $100.78 in Los Angeles, and no charge in
Pasadena (the Civic's primary competition for events). Pasadena
is currently in the process of renovating and refurbishing their
exhibit and conference center which will give them an additional
marketing edge.
Current clients booked into the civic and who must pay city fees
have protested to the Civic Auditorium Manager. One client is
considering moving his two events to another venue if the business
license fee continues to be charged since his fees increased from
$50.00 to $450 per event. The potential loss of revenue from these
two events is $76,400. A second promotor has seen his fees
increase from $153 to $1,950 for the three, four day events he
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books each year. The potential revenue loss from these events is
$86,100.
If the current business tax is uniformly enforced by the Business
License office for all clients of the Santa Monica civic Auditorium
it is expected that some clients will move their events to other
facilities and the Civic Auditorium will realize a decrease in
revenues.
The practice of obtaining a police permit and fingerprinting
lessees occurred during the early years of the Auditorium's
operation. The Santa Monica Police Department concurs that these
practices are outdated and are no longer necessary for all civic
Auditorium events other than secondhand sales shows such as antique
shows and auctions.
The screening procedure used in the event booking process at the
civic has served as an effective background check on promotors
since the mid 1970's. Currently, prospective clients are required
to submit an application and Auditorium staff researches their
financial and operational history at other facilities before
issuing a contract for the Civic Auditorium.
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FINANCIAL IMPACT
staff projects that revenue for fiscal year 1991-92 from the
business license tax, fingerprinting and police permit fee would
be $12,610.
However, if fees continue to be implemented staff
believes that a minimum of 7 events will cancel resulting in a loss
of $230,000 in event revenue to the Civic Auditorium.
RECOMMENDATION
It is recommended that the City Council direct the City Attorney
to prepare an amendment to Ordinance 1523 Municipal civic Code
section 6053-B exempting Auditorium events from business license,
fingerprinting, (with the exception of secondhand sales shows), and
police permit fees.
Prepared by: Barbara Franklin-Moran
Director, Cultural and Recreation Services
Carole A. curtin
Civic Auditorium Manager
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