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# Home offices catch a break from City Hall
- URL: https://www.smdp.com/home-offices-catch-a-break-from-city-hall/
- Published: 2005-02-22T16:00:00.000Z
- Updated: 2026-10-23T06:09:15.000Z
- Author: John Wood
- Tags: Government & Politics, Santa Monica, #archive-import

*Waving home business fees in hands of Council*

Hundreds of Santa Monica residents will get a refund check from City Hall this tax season.

After billing more than 700 artists, writers and others who work from home for years of unpaid business license fees, the finance director at City Hall has decided to refund $275,000 in penalties already paid, and waive another $25,000.

Many of the residents have worked out of their homes for decades. Some were outraged after receiving bills last month charging them for hundreds of dollars in unpaid business license fees, plus penalties of 100 percent for letting the dues slide.

“We didn’t even know we had to pay it. How would we know?” asked Rita Aikey, 52, whose husband, an artist, works out of their apartment and sells up to $5,000 worth of his works per year. “My God, it’s like you’re so busy working and paying the bills, and you have to know everything. It’s frustrating.”

Officials discovered the unpaying businesses by comparing the city’s business license database against state tax returns, documents they’ve had access to since legislators passed AB 63 in 2001, according to Steve Stark, City Hall’s director of finance.

Stark put forward the idea to pursue unpaying businesses in the spring of 2004, as the city contemplated scaling back services and laying off employees due to an anticipated budget shortfall. The negative reaction it spurred among some residents was reminiscent of the public relations debacle last year over hedge heights, when City Hall threatened hundreds of residents with fines of up to $25,000 a day for letting their hedges grow too tall. The city later reversed its policy in that instance as well.

Any business that grosses less than $60,000 a year in Santa Monica must pay an annual $75 licensing fee, plus $20 for having the fee processed. Businesses that earn more than $60,000 pay a percentage depending on the services they offer.

MBIA, an outside consultant, was hired last year to bill unlicensed businesses under a contract that entitled the consulting firm to 30 percent of any revenue collected. Businesses were billed for unpaid licenses dating back to 2001, plus penalties of 100 percent.

Not just home businesses were targeted, according to Stark, who said any unlicensed business that turned up by comparing the two documents was billed for back fees. Though there are exceptions for things like garage sales and lemonade stands, nearly any business that generates revenue requires a license.

For Mark Humphrey, 52, a writer for syndicated radio programs who has worked for many years out of his Ocean Park apartment, the unpaid bills added up to more than $700.

“If you want to make friends with constituents, this is not a great way to do it,” Humphrey said Monday. “I’m sure that the city has to find creative ways to tax people, but I’m thinking there are also ways to do that and not make people upset, or make them relatively less upset. None of us really want to pay more taxes, but if you start with a point of saying, ‘This is a law in Santa Monica... Maybe you didn’t know about this law, so let’s start (enforcing it) today.’”

Humphrey complained to City Hall and found a sympathetic ear in City Councilman Kevin McKeown, who pushed to retract the penalties, a move formally taken this month.

McKeown applauded the city’s decision to drop previous penalties for businesses that didn’t pay their fees, but said he would like to see the dues waived entirely for small home businesses.

“That fits with my philosophy overall,” McKeown said Monday. “I’d love to see us have a non-corporate, local economy. People who work at home spend at local stores and restaurants, and with the traffic problem we have, work-at-home is a great alternative to the commute-and-pollute lifestyle.”

Waiving the fee for small home businesses would require a council direction, and McKeown said he would push to put the matter before his colleagues sometime this spring.

Dropping back penalties didn’t require a council vote, however. Stark made the decision to refund the 100 percent penalties after being inundated with calls, e-mails and letters from residents upset over the penalty but willing to pay the tax.

“Most of the people said, ‘You know, I’m a citizen here. I live here. I work here. I pay taxes. If I had known I needed a business license, I would have gotten one,’” Stark said.

“They were willing to pay for the business license, they just felt that the penalty was excessive,” added Stark, who said the grace period lasts until April 15, after which penalties again begin to accrue. “We listened to the complaints and tried to be responsive.”

*Originally published in the Santa Monica Daily Press print edition on February 22, 2005.* [Read the original PDF.](https://s3.us-east-1.amazonaws.com/smdp%5Fbackissues/022205.pdf?ref=smdp.com)