TO:
Honorable Mayor and Members of the City Council
THROUGH:
Mark Danaj, City Manager
FROM:
Tony Olmos, Public Works Director
Sona Coffee, Environmental Programs Manager
SUBJECT:Title
Resolution No. 15-0062 Establishing Fees for the Tobacco Retail Permit (Public Works Director Olmos)
ADOPT RESOLUTION NO. 15-0062
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Recommended Action
RECOMMENDATION:
Staff recommends that City Council adopt Resolution No. 15-0062, establishing the fees for the initial tobacco retail permit, and for the annual permit renewal.
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FISCAL IMPLICATIONS:
Staff has identified the costs necessary for processing the tobacco retailer permit. These fees help offset staff hours which include costs for staff review and processing of the permit application, and the inspection process. The initial fee for the permit application would cost retailers $242, while the annual permit renewal fee would cost $183.
BACKGROUND:
The City seeks to encourage responsible tobacco retailing, and to discourage violations of tobacco-related laws, especially those that discourage the sale or distribution of tobacco and nicotine products to minors. On December 1, 2015, the City Council approved Ordinance No. 15-0020, to institute a tobacco retail licensing program in the City of Manhattan Beach. Ordinance No. 15-0020 details several key requirements for retailers who sell tobacco products or electronic cigarettes.
DISCUSSION:
The establishment of a tobacco retail licensing program in the City of Manhattan Beach requires tobacco retailers to obtain a permit to sell tobacco and electronic cigarette products in the City. This program includes a permit application and inspection process, and the creation of a fee for the permit is necessary to cover the City's expenses.
Ordinance No. 15-0020, in Section 4.119.100, authorized the City Council to establish fees to issue or renew a retailer permit. Resolution No. 15-0062 outlines the proposed fees as follows:
• Initial Permit = $242; and
• Annual Renewal = $183.
The costs associated with these fees are calculated for each permit application, and includes the staff time of the Code Enforcement Officer, Assistant Planner, Permit Technician, and an Account Services Representative, as detailed in Attachment 2. The City identifies all costs associated with activities, including overhead, to determine the true cost of providing City services.
Other enforcement strategies, public education efforts, and generating and mailing the annual renewal letter are covered through the City’s overhead costs associated with the fully burdened salary rate. As stated in the August 18, 2015 report to City Council, these fees are in line with other cities throughout California that also have a local tobacco ordinance.
As the City conducts its periodic cost recovery and user fee study, these rates may fluctuate and will be changed accordingly.
The Tobacco Retail Ordinance becomes effective January 1, 2016. Staff proposed a 90-day implementation period for retailers to come into compliance with the ordinance, and apply for the tobacco retail permit. This is also in line with the implementation period in other cities, with timeframes ranging from 30 days to 90 days for retailers to come into compliance.
With a 90-day implementation period beginning on January 1st, the enforceable date of the ordinance will be April 1, 2016. Letters will be sent to the tobacco retailers to alert them of this deadline and encourage them to apply for the tobacco retail permit. City staff will then begin the permit application and inspection process to ensure retailers are in compliance with the ordinance requirements.
POLICY ALTERNATIVES:
ALTERNATIVE #: 1 - Waiving Permit Fees
City Council can elect to waive permit fees for tobacco retailers and absorb the cost of the application and inspection process. For the existing retailers in the City this amounts to $242 for each permit application, plus an additional $183 each year for the permit renewal. So the City would need to absorb an estimate $5,082 in application fees, and an annual $3,843 in renewal fees. This estimate is based on the 21 existing retailers in the City, and does not include funds for any new retailers that wish to obtain a tobacco retail permit in the City.
PROS:
Waiving fees will benefit existing tobacco retailers who currently have to pay the fees for a State permit and the City’s business license tax. Waiving permit fees would also remove any potential cost impacts for new tobacco retailers that wish to open a business in Manhattan Beach.
CONS:
Since the City Council adopted the Tobacco Retail Ordinance, City staff must develop, implement, and monitor the tobacco retail program. The costs associated with the program implementation will have to be absorbed by the City, instead of being recovered from the retailers.
PUBLIC OUTREACH/INTEREST:
Tobacco retailers and the various business associations in the City have been made aware of the proposed tobacco retail permit program through direct mail letters and presentations by City staff. Several retailers also submitted comment letters and attended City Council meetings to share their thoughts on the program.
CONCLUSION:
Staff recommends that City Council adopt Resolution No. 15-0062, establishing the fees for the tobacco retail permit.
Attachments:
1. Resolution No. 15-0062
2. Tobacco Retail Permit Fee Summary