Tempe staff propose $25 general business license, council weighs exemptions and a free sign‑up window

Tempe finance staff told the City Council work study session they plan to present a proposed general business license intended to create a comprehensive business registry, improve outreach and planning, and collect demographic information about local businesses.

Laura Calder, financial services director, and Josh Bice, tax and license manager, described a proposal that would require most permanent businesses operating in Tempe to obtain a general business license, while exempting entities that already hold regulatory licenses and certain activities identified by state law. Staff said the city estimates more than 30,000 licensable businesses operate in Tempe but that the city currently has reliable data for about 1,300 regulatory license holders.

Under the concept presented, the general license would carry a proposed $25 annual fee; staff proposed a trial sign‑up period to encourage registration such that businesses that sign up before Jan. 1, 2026, would pay no fee and would not be required to renew until Jan. 1, 2027. If businesses sign up after Jan. 1, 2026, the annual $25 fee would apply. Staff said administration would be handled by the city’s tax and license division and would not require departmental signoffs from fire, police or building safety for this license.

Calder and Bice described exemptions: businesses with existing regulatory licenses, temporary event vendors, casual sellers (less than four events per year), and activities covered by state law such as real estate brokers and certain residential rentals. Staff also noted state legal limits on requiring licenses from federal or state agencies.

For enforcement, staff proposed an education‑first approach with outreach letters and routine checks; they recommended a 30‑day renewal window and a 50% penalty assessed after that window. Staff illustrated how the $25 fee compares with neighboring cities and said two council hearings are scheduled (May 22 and June 5) with an effective date proposed for Aug. 1 if the ordinance is adopted.

Councilmembers generally supported the concept. Councilmember Keating suggested making the first year free for new businesses; several colleagues said they were comfortable with the proposed $25 fee and the initial free sign‑up window for all registrants. No formal vote was taken at the work study session; staff will bring a draft ordinance to public hearings.