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Item # 30
City of Santa Ana
20 Civic Center Plaza, Santa Ana, CA 92701
Staff Report
December 20, 2022
TOPIC: Home Occupation Permit Fee Resolution
AGENDA TITLE:
Adopt a Resolution Approving a Reduced Home Occupation Permit Fee for Home-Based
Businesses/Home Occupations Operating from Residential Premises within the City
RECOMMENDED ACTION
Adopt a resolution approving a reduced Home Occupation Permit Fee for businesses
operating from residential premises within the city, lowering the permit fee from $320.00
per permit to $50.32 per permit.
DISCUSSION
Section 41-192.3 of the Santa Ana Municipal Code requires that every business operating
from residential premises within the City secure a Home Occupation Permit (“HOP”) and
comply with all applicable provisions of the City’s Municipal Code relating to home-based
businesses/home occupations. Since the original establishment of a HOP in 1982, home-
based businesses and the gig economy have grown significantly, especially in recent
years. Over the passage of time, the fee charged for a HOP has increased in tandem with
the Certificate of Occupancy fee. Historically, the City of Santa Ana (when compared to
neighboring municipalities in the County), has had considerably higher Certificate of
Occupancy and Home Occupation Permit fees.
For FY 2022-23 and in time for the adoption of the Miscellaneous Fee Schedule, the
Planning & Building Agency (“PBA”) with City Council approval, restructured the
Certificate of Occupancy (“COO”) fee for new businesses operating from commercial
premises within the City from a single charge per Certificate of Occupancy to a two-tier
system. The Tier 1 cost of a Certificate of Occupancy for businesses occupying less than
5,000 square feet of commercial area is $134.24 per certificate issued (including planning
and inspection), and the Tier 2 cost for all other commercial occupancies (including
planning and inspection) remained at $499.36 per certificate.
The approved restructuring of the COO fee prompted Staff to evaluate the current work
effort in the HOP process and look for opportunities to streamline and cost savings similar
to the recent review of COO process. The City’s new cost to issue a Home Occupation
Permit, based on a streamlined approach, is $50.32. These efforts to streamline the
Home Occupation Permit Fee Resolution
December 20, 2022
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process for applicants will bring the fee into better alignment with surrounding cities in
Orange County.
In addition to restructuring business license tax rates, Measure W contains a Tax Holiday
component for unlicensed, past-due, and under-assessed businesses. One of the aims
of the Tax Holiday Program is to reach out to the underground economy that exists in the
form of home-based businesses. Home-based businesses must apply for and receive an
approved HOP before they apply for a Santa Ana Business License. Reducing the HOP
fee for Santa Ana home-based businesses is in keeping with the spirit of Measure W,
which is namely to make it easier and more affordable for small and home-based
businesses to obtain a business license. Therefore, staff recommends approval of the
new HOP fee rate of $50.32, a decrease of $269.68 from the current fee rate of $320.
ENVIRONMENTAL IMPACT
There is no environmental impact associated with this action.
FISCAL IMPACT
The City currently collects roughly $35,000 per year for Home Occupation Permits. At this
time, it is difficult to anticipate the impact to revenue. Through the efforts of the tax holiday,
staff expects more home-based businesses to begin complying with the City’s Ordinance.
Therefore, the overall impact of more home-based businesses paying less may be
immaterial.
EXHIBIT(S)
1. Resolution
2. Miscellaneous Fee Calculation – Planning and Building Agency – Home
Occupation Permit
Submitted By: Minh Thai, PBA Executive Director
Kathryn Downs, FMSA Executive Director
Approved By: Kristine Ridge, City Manager
Resolution No. 2022-XXX
Page 1 of 3
RESOLUTION NO. 2022-XXX
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
SANTA ANA REDUCING THE FEE FOR HOME
OCCUPATION PERMITS AUTHORIZED IN ACCORDANCE
WITH CHAPTER 41, ARTICLE II, SECTION 41-192.3 OF THE
SANTA ANA MUNICIPAL CODE FROM THREE HUNDRED
TWENTY ($320.00) DOLLARS TO FIFTY DOLLARS AND
THIRTY-TWO CENTS ($50.32)
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SANTA ANA AS
FOLLOWS:
Section 1. The City Council of the City of Santa Ana hereby finds, determines and
declares as follows:
A.On November 1, 1982, the City Council adopted Ordinance No. NS-1654
establishing a Regulation of Home Occupations scheme setting forth the conditions for
conducting home occupation activities from a residentially zoned premises, codified as
Section 41-192.2 of the Santa Ana Municipal Code (SAMC). Contemporaneously, the City
adopted a requirement for a Home Occupation Permit as may be set by resolution of the
City Council, codified as SAMC Section 41-192.3.
B.On July 20, 1987, the City Council adopted Ordinance No. NS-1922, which
comprehensively revised SAMC Chapter 21 (Business License Tax Code) pertaining to
business license taxation of all business conducted within the City, including home based
occupations.
C.On February 4, 2013, the City Council adopted Ordinance No. NS-2841,
modifying the Business License Tax Code, and in part specifically addressing home based
business and home based occupations, allowing home based businesses/home
occupations to elect alternative methods of business license tax assessment.
D.On November 8, 2022, the voters of the City of Santa Ana approved a Voter
Ballot Measure (Measure W) restructuring business license tax rates for all businesses
conducted within the City, including home based businesses / home based occupations.
E.On November 8, 2022, along with the passage of comprehensive business
license tax rate restructuring under Measure W, a Tax Holiday was also adopted as part of
Measure W. The primary purpose of the Tax Holiday is to afford unlicensed businesses
doing business in the City to obtain a current business license without penalty and without
regard to any prior arrearage. A substantial number of the unlicensed businesses subject to
the Tax Holiday provision of Measure W are home based businesses / home occupations.
EXHIBIT 1
Resolution No. 2022-XXX
Page 2 of 3
To legally operate, such home based business are required to obtain a Home Occupation
Permit. The fee for the Home Occupation Permit, which was $25.00 in 1982, increased over
the intervening years to $320.00. At the same time, the comparable Certificate of
Occupancy fee (SAMC Section 8-95) applicable to commercially based businesses, which
was $50.00 in 1982, increased over the intervening years to $499.36.
F. On June 7, 2022, the City Council approved the miscellaneous fee schedule
for fiscal year 2022-23, where the Certificate of Occupancy inspection fee was reduced to
$134.24 for business/mercantile occupancies less than 5,000 square feet in area.
G. An analogous reduction in the Home Occupation Permit fee, adjusted for (1)
home business occupancies not to exceed 400 square feet and (2) not requiring physical
inspection of the home residence, would equal $50.32.
Section 2. The City Council hereby establishes the Home Occupation Permit fee
at fifty dollars and thirty-two cents ($50.32), lowering it from three hundred twenty ($320.00)
dollars. The $50.32 fee shall become effective January 1, 2023.
Section 3. This Resolution, upon its adoption by the City Council, shall take effect
January 1, 2023, and the Clerk of the Council shall attest to and certify the vote adopting
this Resolution.
ADOPTED this ____ day of ___________________, 2022.
Mayor
APPROVED AS TO FORM:
Sonia R. Carvalho, City Attorney
By:
John M. Funk
Chief Assistant City Attorney
AYES: Councilmembers
NOES: Councilmembers
ABSTAIN: Councilmembers
NOT PRESENT: Councilmembers _
Resolution No. 2022-XXX
Page 3 of 3
CERTIFICATE OF ATTESTATION AND ORIGINALITY
I, __________________, Clerk of the Council, do hereby certify the attached Resolution No.
2022 - _____ to be the original resolution adopted by the City Council of the City of Santa
Ana on _____________________, 2022.
Date:
Clerk of the Council
City of Santa Ana
Instructions for Calculating the Fee
% of Employment
Dedicated to
Miscellaneous Fee
Activity
Total Salary &
Benefit Cost
-$
-$
-$
Hours of
Employment
Dedicated to
Miscellaneous Fee
Activity
Total Wage &
Benefit Cost
0.10 3.56$
0.50 38.44$
0.25 8.32$
-$
-$
-$
Office Supplies -$
Rent -$
Utilities -$
Contracts -$
Fleet Charges -$
Tools -$
Equipment -$
Other (Specify)-$
-$
-$
-$
-$
Total Miscellaneous Costs -$
Total Expenses 50.32$
Current/Proposed Fee
Full Cost Recovery (Partial Cost Recovery) $ (50.32)
Please explain if not full cost recovery…
24.68 8.60
Hourly Employee Costs
Job Title Current Annual
Salary
Annual Benefit
Cost
Personnel Costs
Miscellaneous Fee Title:Home Occupation Certificate
1) Consider all Personnel Costs involved in this fee (i.e. salary, insurance, retirement, workers comp, etc.)
2) Add all Miscellaneous Costs involved in the fee (i.e. supplies, rents, contracts), only allocate the revelant portion of each
cost related to the fee
3) Input the current/proposed fee that is charged
4) If only partial recovery, please explain
Salary Employee Costs
City of Santa Ana
Miscellaneous Fee Calculation
Department Information
Department:Planning and Building Agency
Job Title Hourly Rate Hourly Benefit
Cost
Receptionist 22.28 13.28
Senior Planner 62.36 14.52
Miscellaneous Costs
Expense Calculation
Senior Office Assistant
$50.32
EXHIBIT 2