Council Rejects Business License Tax on Realtors

The tension in City Chambers was palpable as Bruce Moe, city finance director, took the podium near the end of a shorter-than-expected City Council meeting Tuesday.

Moe came before the council to present the findings of a committee investigation into the employment status of real estate agents and whether the city should collect a tax on their business licenses. Realtors filled the chambers' seats and lined its circular back wall, at times uttering guffaws and under-the-breath comments at Moe's responses to council questioning.

Ultimately, however, they never got the chance to fully air their grievances with the proposal as the council shot it down without much discussion.

Councilman Nick Tell asked Moe a simple question: "Are we missing something here?" Those in attendance seemed to want to shout out, "Yes!" However, Mayor Mitch Ward stifled some of the angst by stating, "We don't think you've reached out enough … to the Realtor community."

To this suggestion, Tell responded, "Unless there is a desire to take it further, we can just keep the tax the same." This sentiment was seconded by Councilwoman Portia Cohen who, to rounds of applause in the audience, cited the state of the economy before observing, "Businesses need a break. They are looking to government to find cuts, not revenue."

"That's enough for me," replied Ward. He then asked that the issue be laid to rest and simply directed his staff not to collect the hot topic tax.

And so, at the end of many weeks of research, several letters back and forth from staff to the South Bay Association of Realtors, and multiple staff reports to the council on the various nuances of whether Realtors are actually employees, the whole event ended rather uneventfully.

If agents were indeed deemed by the city to be employees of the brokers they work with, they would be excused from paying the business license tax required of all independent contractors doing business within city boundaries.

If, on the other hand, they were determined to be independent contractors, they would have had to pay the $205 annual tax plus a small business tax on gross receipts.

Moe's report from staff included opinions from the City Attorney's Office and a comparison to the tax collection in neighboring cities. However, the content of Moe's report was largely insignificant once the council began its own line of questioning into the issue.

David Kissinger, director of government affairs for the South Bay Association of Realtors, said that some may have been disappointed they did not get a chance to share their two cents, but that ultimately, Realtors walked away happy.

"You only get three minutes, so you plan what you're going to say in your narrow window," he told Patch. "You get yourself built up.

"We are certainly happy with the way it turned out," he acknowledged. "The tax wasn't right on so many different levels, and council definitely did the right thing."

Tell issued an apology to those in attendance for taking their time to discuss an issue that, apparently, needed no public discussion. He said he was, "disappointed in the miscommunication with City Council and staff" that led to weeks of debate over an issue the council had no interest in pursuing.

Cohen echoed this statement, adding her own opinion that the Chamber of Commerce should have been present to help resolve this issue and stating she hoped the council takes the opportunity to do so in the future.

As those in attendance began to gather their belongings and head home from the meeting, Mayor Pro Tem Richard Montgomery issued a final statement, reminding all in attendance that the finance committee members were "doing their job to find sources and bring revenue to us." That revenue, he noted, goes to support the fire and police efforts in the city, something the community relies on.

"We haven't seen some of you in years," he added, emphasizing that public discussion of the issue was not a failure of the system but a display of the system at work.

Kissinger backed up Montgomery's observations in his own comments to Patch, saying he was very pleased with the turnout Tuesday night. The meeting began with a ceremonial recognition of police and fire officials.

"I am happy our Realtors got to see that," Kissinger said. "You make a community out of stakeholders, and those individuals are stakeholders in a very important way. Our Realtors are [also] community stakeholders in every sense. They own businesses here, they live here, and they've got kids in school here."

As the room cleared out, and despite the fact no real estate agent had had the opportunity to speak at the podium, it was clear to most the public voice was heard.