Brouhaha continues over city’s business licenses

Mountain View’s ongoing dragnet targeting unlicensed businesses operating in the city may be creating more problems than it is solving. Since the effort launched last year, the city has netted just over $10,000 in new license fees, but it is burning through the goodwill of many residents.

The Voice detailed Mountain View’s efforts to rein in noncompliant businesses last year. Since then, complaints have been mounting from hobbyists and professionals who say they are being unfairly targeted. Some have hinted they might take legal action against the city.

Take the example of Roy Mize, a longtime Mountain View resident who received a letter in the mail last month indicating he could need a business license. The message came from HdL Companies, a Los Angeles County firm hired by Mountain View to track down unlicensed businesses for a cut of the proceeds.

In the letter, HdL representatives noted that Mize’s company, Workplans, was conducting business in Mountain View and should get a license.

That notice left Mize scratching his head. Now 82 years old, he’s been retired for more than 15 years. Workplans was never a business, he said. It’s an old dummy website of garden pictures that he and his wife created years ago while they were taking a HTML class.

As he mulled the letter, Mize became more incensed. How did they get his information? Why didn’t they visit his site before sending a letter? How many others had paid the fee just to avoid the hassle?

Mize now believes HdL was scouring website URLs and spamming any sites they could trace to Mountain View. Needless to say, he is refusing to pay.

“This is ridiculous — all they would have to do is look at my website to see that I’m not operating a business,” Mize said. “They aren’t asking for much money, but it’s the principle of the matter.”

City finance staff defend the program. They point out that the letters sent out on behalf of the city are only suggesting that the recipient may need a business license. Anyone who thinks he or she was contacted in error can call up HdL and explain the mistake, wrote Assistant Finance Director Suzy Niederhofer in an email. In the case of Mize, she believes that a phone conversation would have cleared up the issue.

“People or organizations who believe they are not subject to the business license requirement have the opportunity to explain why they are not subject to it,” she said. “After a brief conversation, (HdL) would likely inform Mr. Mize he is not required to have a business license.”

But even some who are clearly running a business say they feel wronged by the new enforcement. Gregory Baum, a 70-year-old resident, also received a warning letter from HdL. The letter was sent last year regarding his sales of Western-themed art and antiques.

Baum describes his trade as more of a hobby. For years, he’s occasionally hawked items at local flea markets and events, earning maybe $3,000 a year after expenses, he says. He can’t recall ever selling an item in Mountain View — all of his transactions have been in other cities, he says.

Baum went to City Hall to explain this, but he was told he still needed a city license since his business was “emanating” from Mountain View. He decided not to put up a fight because he was told it would cost only $31 to register.

But that turned out to be wrong. The bill from HdL that arrived in the mail was for $178. He was charged for four years of business-license fees plus late penalties.

“At this point, I’ve only done about $250 worth of business through the year,” Baum said. “This isn’t me getting rich; it was always just a hobby of mine.”

HdL was hired in 2015 to audit the city’s business licenses. The job involved tracking down unlicensed businesses and persuading them to come into compliance. Under the deal, the city doesn’t directly pay HdL, but the firm is entitled to keep 35 percent of any new business fees it helps capture.

In an interview, HdL professional services director Josh Davis declined to give specifics on how his company tracks down unlicensed businesses. Basically, the company’s methods involve searching through state and county databases for clues of business activity, he said.

But how could this database search mistake Mize’s website of gardening photos for a business?

“I can’t give any specifics on how this popped up, but there must have been something,” Davis said. “It’s inherently an investigative process and sometimes people have absolutely no legitimate business. But most times they do, and we help them get compliant.”

Yet some organizations with clear business ties to Mountain View seem to slip through the dragnet. As noted in the Voice story published last year, HdL was lacking a Mountain View license even though it was conducting business activity within the city. Since then, the firm has apparently paid its fees back to 2013 and is now listed in the city’s license database.

Similarly, many obvious names of large global companies operating within the city are conspicuously absent in the city’s listings, including Airbnb, Uber, and Amazon. Asked about this, City Finance Director Patty Kong said retail websites like Amazon fall outside the city’s purview since they use third-party shippers to deliver packages. She suggested that companies that use independent contractors, like Airbnb and Uber, could be required to get licenses for each contractor, but she couldn’t say whether the city has tried to compel the contractors to pay the fees. Davis declined to say whether these companies had been contacted.

“If a business has no physical presence in the city, then no license is required,” Kong wrote. “However, a business that is located in Santa Clara, but comes to Mountain View to conduct business, is still required to have a license.”

City staff could not say exactly how much staff time has been spent managing the business-license audit. The practice of cities outsourcing business-license enforcement is nothing new. Many municipal contractors reportedly offer the service, and Davis estimated that about one-third of California cities retain an outside firm to do it.

But in Mountain View, the business-license sweep has apparently touched a nerve. The backlash started last summer when HdL officials argued that Mountain View resident Jan Johnston-Tyler was obliged to get a business license because she telecommuted for her Santa Clara business from her Mountain View home. The city later dropped the case, but Johnston-Tyler remains bitter over the episode.

“This is overreach and it must be stopped,” she wrote to the Voice. “HdL’s primary objective is to make money out of fear. How my city, in which I have lived for over 30 years, continues to work with them is unthinkable.”