Fee Ordinance Stems “Business Friendly” Discussion On Council

Fee Ordinance Stems “Business Friendly” Discussion On Councilthumbnail
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Published: May 6, 2015 @ 8:00 PM EDT

Ordinance 2438 was introduced at the April 16th Mayor & Council meeting. That proposed law is set to increase the number of video game arcade (or amusement or entertainment machine as it is categorized) licenses in any one business establishment from 5 to 15. It also is set to increase the fees per machine to $250 per machine for the first five machines and $125 for each machine between 6 and 15. It was this last part of the proposed amendment that led to a discussion between members of the governing body about fees and what the municipality can do to become more business friendly.

Third Ward Councilman Ryan Kelly started by asking if ordinances could be written so any changes, deletions, or amendments could either have the original ordinance included or if the alterations could be highlighted in some way as they were done in previous years with strikeouts and bolded sections to reflect changes.

“Sure,” responded Doreen Cali, the Borough Clerk.

The councilman went on to ask that if the license fee was changed, what was it previously. He was notified by the Borough Clerk that the previous limit was five machines per premises and the fee structure was as follows:

  • $75 for one machine
  • $100 for each machine if a business has 2 machines
  • $200 for each machine if a business has between 3 and 5 machines

The councilman asked why there was a substantial increase from $75 to $250. He erroneously did not take into account the increase for more than one machine in his questioning. For some machines the increase is only $50 per machine.

Ms. Cali responded, “Actually, what we did is we copied Union’s [ordinance]. We went to the city of Union that allowed the same amount and went to their license. When I spoke to them, they actually  felt that the income in revenue that will be generated would warrant – for 15 machines – an additional fee. I basically used that as our template.”

Councilman Kelly then remarked, “While I’m not particularly okay with such a large increase and regardless of the reason why, are there any other businesses that are going to be affected?”

Ms. Cali stated she could run a report of businesses that are currently paying a license fee.

The councilman continued, “The other idea I had, just because it’s a new business in town, [since] we don’t have an arcade in town or anything along those lines . . . is it possible or would mayor and council like to explore waiving any licensing fees on these arcade machines? I mean, we don’t know if this is going to be successful the first year, two years . . . The way I’m seeing it is we’re dinging him for each and every machine on an annual basis.”

“You may want to think about that,” responded the Borough Clerk, “You’ll want to talk to the Police Chief because when you have these many games, it does tend to cause a little bit of a crowd scene. In some communities they frown on it because they don’t want unanticipated problems with it.  Not sure if you want arcades popping up all over town if they [the fees] were to be free. It may become like a tanning or nail salon where you have 100 arcades all over. I would speak to the Police Chief because he said this one wouldn’t be a problem. I don’t know how he feels about multiple ones.”

Councilman Kelly stated they were all valid concerns but wanted to know the correlation between public safety issues and the increase in licensing fees. He then added, “I’m just thinking, new business coming into town, trying to set them up for success, [being] business friendly, we now are on a one year trial basis for free parking. I thought it was something that we should at least explore.”

The Borough Clerk provided a tally of the fees that would be collected annually from this one business to be $3,750 although it would actually be $2,500 since the ordinance structure would charge $1,250 in total for the first five machines (at a rate of $250/machine) and another $1,250 for the remaining 10 (at a rate of $125/machine).

Mayor Carl Hokanson joined the conversation by stating, “You’ve got to understand something. This business has been going on for a few years in the city of Union so this gentleman is well-aware of what he needs [to pay].”

The mayor added that he might be open to some type of incentive but was not sure if it could be done.

It would be like offering a tax cut to somebody who’s not looking for it.” -Councilwoman Charlene Storey

“[For] somebody as heavy as [this] coming into Roselle Park at these rates,” stated Councilwoman-At-Large Charlene Storey, “It would be like offering a tax cut to somebody who’s not looking for it. I think it’s perfectly reasonable and I think that it’s a good thing to see if it is going to  . . . add perhaps something of a burden to the police department. The money has to come from somewhere to cover that. And I think it’s only fair to come from [fees].”

Mayor Hokanson commented that he asked the Roselle Park Police Department (RPPD) to review the proposed business owner’s security plan. Additionally, the mayor stated he reached out to the Township of Union to find out if there were ever any public safety issues, commenting, “I contacted Union, there’s been no problems. So as far as police protection, there’s no issue there. He has been paying this sum of money to the city of Union for a good many years so it’s a part of doing business. If you want to sit back and say ‘hey, you want to knock of $700 as a good gesture for the first year…”

Councilman Kelly interjected by stating that such an idea would be a good incentive for businesses.

“We’d have to waive the fees for all the people,” objected Ms. Cali.

The Councilwoman-At-Large remarked, “It seems to me that we’re… It is a new business. He’s not raising any objections to the fees. He’s happy with it. I see no reason to create a problem where there isn’t one.”

First Ward Councilman Eugene Meola voiced his opinion on that one point, saying, “Then others will be asking for it as well.”

The Borough Clerk continued by stating that separate ordinances could not be written allowing non-payment for the first year of a business while having other businesses already in existence pay a full amount. In the past, there was a separate fee structure for the Special Improvement District (SID) that did the exact opposite by having certain businesses in one area of town pay an additional 3% in property taxes to be used for the SID. In its final year of existence, the SID even was working out a structure where certain businesses would pay more than the 3% while others would pay less, as an incentive to have more businesses want to continue with the program. The SID was abolished last year.

“We also don’t have businesses knocking at our door either,” responded Councilman Kelly.

Councilwoman Storey added, “We’re cutting income for the Borough of Roselle Park which we don’t exactly have a whole lot of extra income sitting around.”

“We also don’t have businesses knocking at our door either,” responded Councilman Kelly.

“But this guy is,” said the Councilwoman, “He’s happy. We’re not luring him. We don’t have to romance him to come into town. He’s happy to come into town. Why are we creating a problem where one doesn’t exist?”

Mayor Hokanson said, “In speaking to the gentleman, he is the one who came up the amount . . . because he feels, again, in order to make money you’ve got to spend money.”

The Borough Clerk commented that the business owner, in fact, is hoping to increase the number of machines as his business prospers. The business is Football Frenzzy that is scheduled to open at 33 West Westfield Avenue in June.

“The machine amount’s not troubling me, it’s the amount per machine,” said Councilman Kelly, “So he would rather pay $250 per machine than $75 per machine?”

‘Yes’ was the response he received from various people on the dais.

“Why?,” was Councilman Kelly’s basic question.

“Because he’s paying it in Union,” replied Councilman Meola.

Councilwoman-At-Large added, “This is what he expects, that’s the price of doing business.”

The Third Ward Councilman remarked, “Just because that’s the way it’s been done doesn’t mean we have to do it that way especially when we have multiple properties [and] developments that could be coming down the road. I think it’d be some good word of mouth as far as what Roselle Park is doing in being pro-active and allowing businesses to come in.”

Charlene retorted, “Well, I see no reason to cut [the fees].”

She then closed discussion by asking for a vote. Councilman Kelly, before conceding to the vote, asked if the type of business is permitted in the Business District and if the business would need to go before the Municipal Land Use Board.

“It does not need to go before Zoning nor Land Use,” stated Mayor Hokanson.

A review of the Borough Code Book shows that nowhere in the Borough is there a permitted use for arcades, electronic game arcades, family fun centers, or indoor play areas. The municipality uses the North American Industry Classification System, commonly known as NAICS, to zone certain businesses for different areas within the Borough. In Roselle Park, zoning is structured so that if it is not explicitly permitted, then it is prohibited. The NAICS code for arcades is 71320 and it is not listed as a permitted use anywhere.

The only way to allow such a business would be to have the business apply for a variance to allow a certain business in a zone where it is not permitted or by having council introduce and pass an ordinance that allows a certain business in any given zone. This was done before with the governing body passing an ordinance that allowed a pet grooming establishment where it was not previously permitted.

Although this saves a business money by avoiding application fees, such an ordinance has to go before the MLUB for their review and recommendations after such an ordinance is introduced by the governing body. Once the MLUB submits its comments and recommendations, council then votes on the ordinance to make it law.

If an ordinance to allow arcades was introduced at the April 16th meeting, it would have been before the MLUB on April 20th and ready to be passed at the May 7th Mayor & Council meeting. As it stands, if an ordinance is introduced tomorrow, it will have to wait until May 18th to go before the Land Use Board and be ready for a vote by council on May 21st. If there is no MLUB meeting on the 18th due to no quorum or no other business being before the Board, the ordinance will have to wait until the end of June to be passed by Mayor & Council.

Another aspect that was not discussed was the impact on businesses that currently have between one and five game machines. Their cost will increase annually at the following rate:

Number Of Machines
Original Fee Total
Proposed Fee Total
Increase ($)
Increase (%)
1
$75
$250
$175
233%
2
$200
$500
$300
150%
3
$600
$750
$150
25%
4
$800
$1,000
$200
25%
5
$1,000
$1,250
$250
25%

When the vote occurred to introduce the ordinance for a first reading, Councilman Kelly was the only ‘no’ vote.

The public hearing on Ordinance 2348 will be tomorrow, May 7th, at 7 p.m. in Borough Hall.

The proposed ordinance is provided below with sections from the original borough code that are being removed being stricken and the new wording bolded:

5-1.2 Licensing Fees; Exemption.

a. Licensing Fee. The Municipal Clerk shall be paid annually the sum of seventy-five ($75.00) dollars for the first amusement or entertainment machine or device installed on any premise. Two machines—one hundred ($100.00) dollars per machine; three (3) or more machines—two hundred ($200.00) dollars per machine, not to exceed five (5) amusement or entertainment machines or devices per licensed premises. two hundred and fifty ($250.00) dollars for each amusement, entertainment machine or device installed on any premise up to a total of five for a period of one year or any part thereof; for all amusement, entertainment machine or device licenses in any one location in excess of five up to a maximum of 15 (i.e., the next 10 amusement, entertainment machines or devices), the fee shall be the sum of $125.00 each for the same period as herein above stated.

b. Exemption from Payment of Fees. Any subdivision of the Borough of Roselle Park or the Board of Education shall be exempt from the payment of any fees set forth herein, upon application by the subdivision or by the Board of Education to the Governing Body for this exemption. (1980 Code § 78-2; New)

5-1.3 Number of Licenses Per Premises Limited.

There shall be permitted no more than one (1) amusement or entertainment machine or device for each six hundred fifty (650) square feet one hundred fifty (150) square feet of a public area up to a maximum number of five (5) fifteen (15) machines or devices per licensed premises. The public area shall be deemed not to include any area used for storage, kitchen, office, counter, walks, alleys, drive and parking facilities or such other areas contained within the premises to which the public is not customarily invited or permitted to occupy. The Construction Official shall determine the maximum number of square feet in each prospective licensed premises which is subject to this section. Premises holding plenary retail consumption licenses and heretofore licensed for video games and/or amusement games are specifically excluded from the square footage requirements of this section and shall be entitled to hold at least the same number of licenses as they held prior to the enactment of this section. (1980 Code § 78-3; New)