For the last few weeks, Bothell Mayor Mark Lamb, Deputy City Manager Steve Anderson and Greater Bothell Chamber of Commerce officials have been visiting with some of the city’s 2,800 businesses to inform owners that a big change may be in store for them.
At its June 19 meeting, the City Council will discuss raising business-license fees to help make up for a loss of $1.5 million annually due to a struggling economy and the Supreme Court eliminating the city’s streetlight and broadband utility service fees over the last few years.
“Council has hundreds of decisions they make every year. With this one, we’re trying to do as much outreach as we can and see the reaction and try to craft a proposal that council could adopt that incorporates the feedback,” Anderson said.
After meeting with a few business owners and chamber officials, Anderson added about their reactions: “They understand what’s going on. It hit them, ‘Oh my gosh.’ They’re worried about the impact on others — because it’s substantial.”
Fee increases could impact Bothell businesses as follows:
• Large company
Current — $5,098
Proposed — $7,544
(800 employees, 60,000 square feet of office space, $10 million annual revenue)
• Medium retail store
Current — $234
Proposed — $952
(25 employees, 10,000 square feet, $1 million annual revenue)
• Small independent business
Current — $39
Proposed — $55
(2 employees, 1,500 square feet, $100,000 annual revenue)
Anderson said that Bothell annually lost $750,000 on the broadband tax, about $1.05 million on the $19-per-household streetlight fee and about $450,000 in business activity and development services during the recession.
The city has dipped into its reserves to help cover the shortfall, Anderson said. Bothell started 2009 with $7.3 million in reserve and it entered 2011 with $4.5 million in reserve. In July of 2011, council authorized the staff to use $1.5 million of those $4.5 million reserves to balance that shortfall.
“Bothell’s lean organization and ability to draw on reserves has given the city the ability to weather the difficult economy better than most cities,” city officials said in a newsletter, adding that Bothell would put itself at financial risk if it continues to draw on reserves to make ends meet.
Bothell has also been able to maintain one of the lowest property tax levy rates in the state: among 281 Washington cities, more than 230 cities have higher tax rates than Bothell’s, the city says.
Also, according to Bothell finance studies, even with the proposed fee increases, businesses still pay less license fees in Bothell than they would in neighboring cities.
J.D. Davis of Sundance Energy Services in Bothell, who has met with Anderson to discuss the proposed fee hike, said that no one likes to see that happen, but the city has to make a financial move in order to stay on course.
Money raised from the business-license fees will go into the Bothell general fund to be used for road improvements. Davis is pleased with this part of the plan, especially with the city’s downtown revitalization on the horizon.
“We have 25,000 employees in Bothell, and the businesses attract customers and employees and deliveries, so that has a tremendous impact on our streets, as do residents, people leaving town to go work someplace else,” Anderson said.
Council could make its decision by June 19 or later, Anderson said. The city sends out business-license renewals in June, and owners return them with their fees by July 1. Changes will go into effect with this renewal.
“Once they make the decision, whatever rate it is will go out — we’d understand if they can’t turn it around by July 1,” he said, noting that the city is not yet sure how they’ll deal with those businesses. “If it’s increased, we will have an insert explaining what happened and why.
“I’m sure that out of 2,800 businesses, some are going to be surprised, (and say) ‘What is this?’ and others are going to say it’s the cost of doing business,” he added.
This might be the first time Bothell business-license fees are raised this high, said Anderson, noting that fees are upped by a small percentage annually based on the Consumer Price Index. In 2002, council had staff look at a head tax ($60 per employee with 20,000 city employees at that time), but they didn’t adopt the proposal.
The Greater Bothell Chamber of Commerce’s Business Advocacy Committee will meet and discuss the issue from noon to 1 p.m. June 19 at the Bothell Police Department, 18410 101st Ave. N.E. The City Council meeting begins at 6 p.m. at Bothell Municipal Court, 10116 N.E. 183rd St.