Pismo Beach will ensure all businesses have licenses. Some people aren’t happy

Pismo Beach is looking to get all the city’s businesses on the same page by enforcing a license requirement — but some business owners say the burden is too heavy.

Since its incorporation in 1946, Pismo Beach has had an ordinance on the books requiring all commercial businesses to have a business license if they want to operate within city limits.

That includes anyone who operates a business, as well as commercial property owners who lease out their buildings.

In the past four decades, the requirement has not been stringently enforced, allowing many businesses to operate without a license over that time because the city lacked the staff to actually enforce the ordinance, city manager Jorge Garcia said.

But now, with a Fresno-based tax agency’s help, the city is trying to make sure all businesses are operating with the proper paperwork, with the goal of equally enforcing the city’s laws, Garcia said.

“It’s not fair and equitable if I have some people with a license and some people who don’t,” Garcia said. “For those that are paying, that’s not fair and equitable, so we want to make sure that everyone is being treated fairly and equitably.”

Now, however, some business owners have taken issue with the city’s handling of the ordinance’s enforcement.

Mark Burnes, a Pismo Beach real estate broker and former member of the city’s Planning Commission, said he’s concerned that enforcement of the ordinance will come down hard on some business owners, with commercial property landlords fearing penalties for non-compliance.

“I had clients that thought they could go to jail for this — what the city has done is they’ve hired a group out of Fresno called HdL that functions on the same tactics as a debt collector,” Burnes said. “There were no courtesy notices — all of a sudden, out of the blue, those of us that have been doing business in Pismo Beach and owned properties in Pismo Beach for decades, suddenly, we get a letter that says non-compliance, demanding that we turn over our gross receipts and more.”

How does Pismo Beach’s business license ordinance work?

Pismo Beach’s business license scales with the gross annual amount of money a business makes, according to Tuesday’s City Council staff report.

On the low end, a license can cost just $20 per year for a business making under $25,000 annually, according to the staff report. At most, a business making more than $5 million in gross annual revenue — a rarity in Pismo Beach — would pay a business license fee of $1,930, the maximum allowable on the city’s scale.

These fee costs can also be written off on a business owner’s taxes, Garcia said.

Funds collected from licenses goes to public-facing services such as street work and law enforcement, while having contact information for each registered business ensures that the city can effectively communicate with businesses in emergency situations and on issues of regulatory safety oversight, Garcia said.

Garcia said that while most of the businesses operating in Pismo Beach currently have a business license, many commercial property owners are out of compliance, though this isn’t due to any malicious intent by the business owners. Without stringent enforcement, the city has largely operated on the honor system, asking businesses to self-report their gross annual incomes and taking them at their word in the licensing process, he said.

HdL’s role is to work with the city and business owners to identify businesses that aren’t in compliance, then help them get registered for a license as needed, Garcia said.

The group of business owners that are most often found without a business license are commercial property owners, who haven’t been asked to pay for a license because of the aforementioned shortage of staffers who can check businesses for compliance, Garcia said.

Just 14 commercial landowners currently have a license for their properties, Garcia said.

An estimated 80 commercial landlords that operate in the city aren’t currently operating with a license, and will only need one license to cover all of their properties, according to the staff report.

A business that owns its own building only has to pay for a license for the business itself, according to the staff report.

The city’s goal isn’t to punish businesses for non-compliance so long as they obtain a business license by Oct. 1, Garcia said; no retroactive penalties will be levied against businesses for not paying a fee they weren’t asked to pay in the first place.

“You have to pay it, but we’re not going to charge a penalty, again, because we firmly believe that this wasn’t malicious people (who were) were trying to evade paying a business license,” Garcia said. “It was that you didn’t know. We take them at their word. Let’s just make sure we’re in compliance.”

Landlords say city enforcement is unnecessary

Garcia said the issue of enforcement was initially brought to the city in February, when HdL started looking through the city’s licenses on file and noticed relatively few commercial property owners had licenses.

Burnes said the city’s decision to make an effort to enforce its ordinance blindsided him and other commercial property owners, and he said the license’s requirement to show proof of a business’ past three years of gross annual income was an onerous invasion of privacy.

He said some of his clients feared reprisal from the city under the ordinance, which allows the Pismo Beach Police Department to arrest non-compliant business owners.

Garcia clarified that not only would an arrest be an extreme last resort, but Pismo Beach has also never arrested a business owner for failure to meet the license ordinance’s requirements in the past.

Burnes said he and other business owners were disappointed that the item will appear at the next City Council meeting on the business agenda instead of a public hearing agenda, where the City Council would be able to decide whether or not the city staff should pursue fully enforcing the ordinance, and blamed Garcia for the handling of the issue.

“He’s relatively new at the position, and I think he’s trying to be a hero,” Burnes said. “He has seriously angered many of us, the most prominent members of the business community, with why they chose to do this now, why they chose not to give a courtesy notice, why they chose not to put it in front of the City Council.”

Garcia said the issue was placed on the business agenda — which still allows for public comment — and not introduced as a hearing because the city’s staff is essentially briefing the City Council on how an existing ordinance will be enforced.

Any change to the actual rates charged under the ordinance wouldn’t even be the council’s decision and instead would require a vote of the people, he said.

“We acknowledge that we maybe could have communicated a little bit more upfront, and in doing so, could we have averted some of the misunderstandings or misconceptions? Certainly, but our commitment has been, is and will continue to be that when we hear of issues, that we address them, and that’s what we think that we’re doing,” Garcia said.

What’s next?

A discussion of the enforcement of business license fees was set to kick off the business agenda during Tuesday’s City Council meeting.

Members of the public were welcome to comment on the item, Garcia said.

Joan Lynch

The Tribune

(805) 781-7812

Joan Lynch is a housing reporter at the San Luis Obispo Tribune. Originally from Kenosha, Wisconsin, Joan studied journalism and telecommunications at Ball State University, graduating in 2022.