Delinquent businesses owe the City of Santa Monica about a million dollars for unpaid fees, fines and permits.

According to the city’s finance department, the city is owed at least $257,000 for lapsed business licenses and another $811,000 for unpaid utility bills, fire inspection fees, CUPA and certain other miscellaneous fees. Business license revenue is part of the General Fund while the other past-due payments are primarily from other city accounts.

Gigi Decavalles-Hughes, Santa Monica’s director of finance, said the money lost to scofflaws is negligible, amounting to less than one tenth of one percent of the city’s overall budget, but that doesn’t mean the city is idle in its collection efforts.

“As of this time, there are 52 commercial accounts that have been referred for internal collection in FY 15/16 and still have a balance owed,” she said. “There are currently 98 commercial accounts that have been referred to an outside collection agency and still have a balance due.”

When the city attempts to collect on debts, it sends a series of notices to inform businesses of unpaid fees and fines. In addition to written notifications, city workers send emails and make phone calls.

“If the unit is unsuccessful in collecting the debt due, the file may be escalated to the Collections unit or Code Enforcement in which one or more of the following takes place:  late payment penalties; administrative citations and fines; referral to the city’s collections agency,” said Decavalles-Hughes. “[The] city also has an on-going discovery and audit program to try to identify unlicensed businesses.”

She said businesses that refuse to pay after receiving multiple notifications may be referred to an outside collection agency.

She said recouping non-business license money from the internal process could raise about $232,000, however much of the $579,000 in external collections is from closed accounts and could be uncollectible.

Decavalles-Hughes said there are 350 active businesses that have past due balances related to the required business license. Those businesses had a valid license at some point but have since lapsed. She said it is difficult to identify the total number of companies operating without a license because some may start up without ever notifying the city.

She said the Business License unit works to educate the business community and handle compliance when necessary.

“Through the sharing of data, predominantly by the Franchise Tax Board, the city identifies business entities and sole proprietors that may be operating without a business license,” she said. “This program is run annually and 300 to 400 unregistered businesses are brought into compliance through these efforts.”

Businesses that choose to forego a business license can be fined, audited, sent to collections or ultimately face criminal prosecution.

The city’s open data portal maintains a list of all fines that are issued within Santa Monica, however it does not include the name of the person or institution that received the fine. The city also provides a searchable database of businesses with a valid license available online at www.smgov.net/departments/finance/buslic/lookup. Total fees associated with operating a valid business can range from a few hundred to a few thousand dollars depending on the kind of business.

Councilman Kevin McKeown said enforcing the fees/fines is a matter of fairness.

“Collecting delinquent payments demonstrates to local businesses that our rules and regulations are fairly and equitably enforced,” he said. “No Santa Monica business should be at a relative disadvantage because a competitor is shortchanging our community. We are a city of great opportunity for business, where everyone should pay their fair share.”

editor@www.smdp.com