Rehoboth looking to increase mercantile fees

Just like they said they would, Rehoboth Beach city staff have come to city commissioners with a proposed increase to mercantile fees.

As part of adopting this year’s budget, the city included a proposed increase to mercantile fees of about 20%, said Assistant City Manager Evan Miller, who was interim city manager when the budget was passed.

In mid-March, for a fiscal year that began April 1, commissioners passed a $38.7 million budget that included an increase in property taxes, parking rates, rental taxes, wastewater meter fees and a future increase to mercantile license fees to close almost all of a deficit in excess of $4 million. The budget includes about $140,000 in projected additional revenue from the increases in mercantile license fees. To fully balance the budget, commissioners also adjusted the projected revenue from Dewey Beach’s wastewater fees by $300,000 and decreased the administration contingency fund by $100,000.

As proposed, a few business licenses would see an increase higher than 20%. For example, the fee for real estate salespersons or rental agents would go from $110 to $400.

Commissioner Edward Chrzanowski said no one type of business is being picked on specifically. Increases above 20% were done because the city wasn’t covering the cost of the free parking permit that each business gets, and each real estate agent is its own business, he said.

One section of the mercantile fees that doesn’t have a proposed increase is the $1,500 fee dealing with telling fortunes, palm reading, phrenology and conjuration. The existing fees for this section are so much greater than others that the city didn’t feel it was appropriate to increase them, said Miller.

The next-highest mercantile fee is one for a restaurant serving alcohol, which is currently $650, but is proposed to be $750.

There was also a discussion on other fees because commissioners have long wanted to conduct a comprehensive review of the city’s fee schedule.

Planning Director Mary Ellen Gray said some of the building permit fees have been revised recently, but it’s been five years or more for others. In those cases, she said, the suggestion is to raise the fees by the five-year average of the Consumer Price Index.

Gray said there’s also a suggestion to increase the cost of reviewing a residential permit from 2% of construction costs to 3%, and a commercial permit from 3% to 4%.

Commissioner Patrick Gossett said he doesn’t understand why the city doesn’t have a general mercantile fee. It appears that some of these business categories were added on an as-needed basis, he said.

This list is like a garden and some weeding is needed, said Gossett.

Commissioner Tim Bennett said he would like an explanation from staff for when a person has to pay extra for someone to look over a permit application or plan, and when it’s simply part of someone’s job. There are instances when things seem out of balance, he said.

Miller didn’t have that specific explanation, but he said sometimes an application requires city staff time that other applications don’t require.

At the end of the discussion, Miller said he would bring back data showing how much it costs the city to recoup the cost of reviewing and issuing a building permit, and a breakdown of the costs associated with issuing fees.

City Manager Taylour Tedder said the city would also look at surrounding communities for their fee schedules.