At the December 13, 2023 City Commission meeting, at the request of Commissioner Laura Dominguez, the Mayor and City Commission referred an item (C4 F) to the Finance and Economic Resiliency Committee (FERC or Committee) to discuss and consider amending the schedule of fees applicable to business tax receipts (BTRs) issued to home-based businesses in the city and to compare with charges imposed upon home-based businesses by other municipalities in Miami-Dade County.

The referral requested the Administration review portions of the City’s fees as they relate to home-based businesses, as well as, conduct an informal survey of what other municipalities in Miami-Dade County charge for the right to operate a home-based business.

This item was presented at the February 23, 2024 FERC meeting and the Administration was requested to return to the Committee with an updated schedule of fees, reducing home-based business taxes, and refreshing recommended BTR categories.

BTRs are issued annually in accordance with Florida Statutes Chapter 205, as well as, locally governed by Article V, Section 102 of the Code of the City of Miami Beach. BTR proceeds are deposited into the General Fund and are used to complement property taxes in paying for City functions including, but not limited to, Police, Fire, and Code. Homebased, for-profit businesses are levied a tax accordingly.

The City conducted a survey of several Miami-Dade County municipalities’ home-based business BTR fees. These fees were discussed at the February 23, 2024 FERC meeting and it was requested the Administration work with Commissioner Laura Dominguez, the sponsor, in reviewing and recommending reducing said fees.  After respective working sessions with Commissioner Laura Dominguez, the following scenario is being proposed for review:

Home-Based Business – Municipal BTR Analysis

The proposed fee structure is a 64% reduction in Local Business Taxes for businesses operating out of a home, yet would only reduce the City’s revenues by approximately $34,000. The Administration is recommending the Committee discuss and provide a recommendation to the Commission the revised fee structure for the Home-Based Business Tax category.

Additionally, a review of current BTR categories was conducted; looking for opportunities for a refresh and an amendment of categories where warranted.  This was done with an emphasis on identifying emerging businesses that do not currently have a BTR category.  Many of these businesses are currently taxed under our Merchant Sales BTR category yet are businesses the City frequently has been requested data for, i.e. Hookah, Cannabidiol (CBD), and Vape establishments.  The proposed amendments would be revenue neutral, as the fee structure for the new categories for existing establishments would mirror the current Merchant Sales category the businesses are currently being charged now. The creation of these new categories would allow the City to more easily track the number of these types of businesses.

The schedule below summarizes the categories and changes being proposed for addition and deletion:

Per Section 1-15(b)(1) of the City Code, entitled “Fee Schedule,” certain fees and charges, as identified in Appendix A shall be subject to annual adjustment by the City Manager, effective October 1 of each year, to reflect increases in the Consumer Price Index (CPI) for the Miami-Fort Lauderdale-West Palm Beach, Florida area, as published by the Bureau of Labor Statistics of the United States Department of Labor.

State Statute prohibits the City from raising BTR fees according to the fee structure set forth in Section 1-15(b)(1) of the City Code. The State currently allows municipalities to raise their BTR fees by up to five (5) percent every other year, well below the City’s current fee escalators of CPI every year.  As part of the proposed BTR amendments, the Administration is recommending codifying the current practice of raising BTR fees by five percent every other year as detailed in State Statute.

The Administration recommends the Committee accept the proposed amendments with instructions to return to the full Commission with an Ordinance memorializing the changes.