EDC hears business-license report: 271 licenses, revenue flat while city explores fee structure

At a recent meeting of the Olivette City Economic Development Commission, senior planner Dawn Doty presented the city’s business-license data, saying the city currently has 271 businesses holding licenses and that those licenses represent “approximately 85% of our business universe.”

Doty told commissioners the city shifted its business-license year after the pandemic to a May-to-May cycle to align better with the fiscal year and ease confusion for businesses. She said the dataset captures employers’ sector and reported employment for merchants and manufacturers, but many exempt organizations and some home-based businesses do not report annual gross sales to the city’s license system.

Why it matters: business-license receipts both generate direct revenue and provide a data source the city uses for economic development planning. Doty said license collections are limited to those businesses that report under the city’s code and that roughly 15% of the business universe remains uncaptured, a gap staff is trying to reduce.

Commission discussion centred on revenue trends and fee design. Doty gave a current receipts figure and the commission discussed several ways the totals can differ depending on the accounting base used. Doty said the city’s business-license receipts in the dataset she reviewed total about $185,000; Council member Kate Pishon Hellman noted that comparing the license receipts to the general-fund revenue figure presented to council produced an estimate near 1.9% of general-fund revenue. Doty also referenced an earlier internal characterization of license-related receipts as 9% of a different budget baseline; commissioners flagged that the differing bases and reporting periods (license year vs. fiscal year) can create apparent inconsistencies in trend charts.

Commissioners and staff identified multiple reasons license revenue has not risen in step with new businesses on the corridor: the city has lost several large merchant contributors (Doty cited Enterprise and US Bank as examples of past large contributors), merchant licenses are calculated as a percentage of reported sales (with a $50 minimum that leaves many small firms at the minimum), and the license-year reporting lag means newly opened 2024–25 businesses may not have reported sales yet. Doty also noted she already has “a little stack of unprocessed business licenses” that could increase reported totals when entered.

Members pressed staff to explain whether the license structure (merchant percentage, flat fees, employee-size categories, square-foot approaches used by other cities) still meets the city’s goals. Commissioners asked that Darren Mann, the city finance director, return to present how the fee schedule is calculated and whether it is a fee the council can change or a tax that requires voter action. The commission agreed it will recommend that City Council review the business-license fee structure and consider whether the city’s objectives are to maximize revenue, collect data, or reduce friction for businesses.

The commission also discussed better data capture and outreach: using secretary-of-state records or sales-tax receipts to reconcile nonreporting businesses, creating a short electronic survey for business outreach, and potentially revisiting which business types are exempt from reporting. Doty said the International Economic Development Council recommends surveying existing businesses because most growth comes from existing firms.

Ending: Commissioners asked staff to schedule a future presentation by the finance director on the fee formula, to return with options (including how other jurisdictions structure fees), and to present a plan for improving business-license capture and business outreach.