Business Community Outraged Over Outsourcing of Business Licenses

A number of business owners descended on town hall at last night’s Feb. 2 Fairfax Town Council meeting upset about a move that put the business licensing renewal process in the hands of a third-party company. That company, Muni Services, LLC, charges a $25 processing fee and asked for personal business information in their invoice – including the business owners’ social security numbers.

“I’m going to bring a check to town hall. I refuse to do business with a company in Alabama. And I’m sorry, but that’s your problem now,” said Jory Prum, who owns his own small business in town.

The decision was made near the end of last year as a cost-cutting measure said council members. According to calculations done at the time, the fully-benefitted hourly rate of having staff process the business licenses was around $100, which barely covered the cost of the license itself. A fully-benefitted hourly rate is used to determine how much of a staff member’s salary, including all benefits and costs, should be calculated in determining the cost of a given activity. Licenses are typically $100-$200, depending on the type of business.

The original staff report is available at right. The letters and invoices business owners received from MuniServices are also available at right.

Council member David Weinsoff, who also owns his own small business in town, said he was shocked to find out the previous year that his business license fee wasn’t raising money for the town at all, but was in fact barely covering (and in some cases not covering) the cost of processing the license.

The council decided at that time that instead of raising business licensing fees, which hadn’t been raised since 2005, the $25 administrative cost to MuniServices was both far less than the $100 it was costing the town to process and in place of a raise in the fee. In turn, the town would be able to keep the entirety of the business license fees and not lose money in the processing. In addition, MuniServices would locate businesses that were not licensed and “make them aware,” said Weinsoff.

“It was not arbitrary. It really was about the finances and how strapped the town staff is,” said Weinsoff.

Business owners remained incensed, though, about the outsourcing of a town function. For small business owners whose licensing fees are around $100, a $25 processing fee amounts to a 25 percent increase. A number of business owners said they’d rather see the increase in fees go to the town. The letters from MuniServices also arrived in most mailboxes around Jan. 28 with a late fee charged for those licenses that weren’t renewed by Feb. 16.

“I am happy to pay the business license fee I owe and have diligently done so each year since founding my businesses in Fairfax, but I am incensed that the town feels it is okay to suddenly increase my fees by nearly 20% without prior notice. In fact, the amount being paid to MuniServices seems utterly outrageous,” said Prum in a letter to town staff.

Prum said he couldn’t understand how it cost the town $100 to process each license. Suggestions to cut down on the costs for the town included having online registration so business owners could input their own information, having interns from Dominican University do the processing, and one business owner even said they would do it for free.

Because the change hadn’t been communicated to business owners or the , many said they were shocked by what looked like a piece of junk mail.

“I would respectfully suggest a good way to handle this would be to waive the $25 fee,” said Chamber President David Smadbeck.

“What we didn’t calculate was the loss of trust in the community,” said Mayor Larry Bragman.

The council said they would discuss options with MuniServices, look into extending the deadline for renewal while they reconsidered the issue at their next meeting.

Town Manager Michael Rock today wrote a addressing the concerns and notifying them of changes – including allowing businesses to pay their licensing fee at town hall.