September 16, 1999
To:Planning and Transportation Committee
From:Acting Commissioner, Urban Planning and Development Services
Subject:Comprehensive Review of the Licensing By-law
Purpose:
The purpose of this report is to propose a full review of the City's Licensing By-law. The review would be conducted in the
next 12-18 months and recommendations would be forwarded to Planning and Transportation Committee through the
Licensing Sub-Committee. The initiative would fully review the categories of businesses currently licensed, emerging
businesses that should be considered for licensing, the fee-setting methodology, and opportunities to use licence fees to
fund a broader range of city services to licensed businesses.
Financial Implications:
There are no short-term financial implications. The project includes a review of fees charged to various licence categories
and may, therefore, have longer-term implications for licensing revenues.
Recommendations:
It is recommended that the Planning and Transportation Committee:
1. Endorse a comprehensive review of the Licensing By-law and direct the Acting Commissioner of Urban Planning and
Development Services to prepare a detailed workplan for the first meeting of the Licensing Sub-Committee; and
2. Endorse a change to the Municipal Act to allow for refusal or revocation of a business licence when the operation of a
business is willfully detrimental to the quality of life in a community, similar to those set out in the Liquor Licence
provisions.
Background:
The Municipal Act permits municipalities to license certain types of businesses, trades and occupations (BTOs), and to set
licence fees to recover the cost of administering and enforcing those licences. The Municipal Act and case law restricts
licensing and requires that it be for the purposes of protecting the public interest. More specifically, a municipality can
license to protect public health and to ensure that the business operates within the law, and operates with honesty and
integrity. The former Metro Licensing Commission administered the licensing of businesses until 1998, when the
Commission was disbanded and licensing restructured. As a result of amalgamation, there now exist a number of pressures
for a full review and rationalization of the city's licensing regime.
The value of licensing, where there is a legitimate public interest, is straightforward: the public can be reasonably assured
that checks have been carried out that a business is operated by persons legally entitled to work and that the proprietors
have no record of criminal or other behaviour that calls into question their ability to properly serve their clients. It also
ensures that business operators hold appropriate qualifications to operate the business, operate in an area where the
business is permitted to operate, and are aware of any other conditions imposed by the Licensing By-law or other relevant
legislation. Further, the public should also be assured that there is a reasonable degree of monitoring that the business
continues to operate in accordance with these conditions, and that there exists sufficient force of regulation to limit or
remove the right to operate from businesses which fail to comply with all required conditions.
The Act sets out the conditions for the revocation or refusal of a licence; however, both are seriously restricted by the
Municipal Act, and often require that the city prove that the holder of the licence has personally committed criminal acts,
other violations of statute, or has acted without honesty or integrity. The Act severely limits the use of evidence associated
with the business' impact on the community. It is therefore difficult or impossible for the city to revoke a licence for a
business that has, through inaction or negligence, become a serious irritant to a community (although the city is currently
attempting to do so in three instances). There are, however, community impact provisions related to liquor licences that
could be emulated in the Municipal Act for businesses.
Toronto licenses a wide range of businesses, trades and occupations. The licensing requirements are set out in by-law.
Toronto's Licensing by-law (20-85) has not been subject to full review and rationalization in many years, although recent
studies have recommended such a review. As a result, it has grown gradually over the years by the addition of certain
categories of licence and the occasional deletion of others. There is now a need to do a comprehensive review of the by-law
including a review of the types of businesses currently licensed and new businesses that might be licensed. The need for a
review is driven by the following:
a) The by-law includes some licence classes that have received no applications in years;
b) The by-law includes some licence classes where the public interest in licensing is no longer clear; and
c) Some licensed businesses have subsequently been subject to additional regulation by other levels of government that
may have reduced or eliminated the need for municipal licensing.
d) The by-law does not address new types of business where there may be legitimate public interest in licensing. At least
two former municipalities had stand-alone licensing programmes that must be re-examined in the context of the
amalgamated city (Scarborough licensed adult video stores and Toronto licensed rooming houses).
e) The by-law sets out specifics of renewals that are administratively inefficient to administer (most renewals are the same
time each year, rather than spread over the year, creating significant fluctuations in intake and processing).
f) Because licensing can operate on a cost-recovery basis, it may be timely to simultaneously restructure licence fees to
recover a broader range of city costs associated with licensing, such as health inspections of licensed businesses.
Discussion:
A number of cities across North America, most notably Indianapolis and New York, have carried out major revisions to
their licensing regimes, limiting the classes of BTOs licensed to those where there is clear public benefit, and where there
is no other agency with greater or more appropriate authority. These reviews are typically conducted to reduce red tape for
low or no-risk businesses, and have been driven by a growing body of research suggesting that business licensing is
typically excessive in many cities, and can be an impediment to small business growth. The reviews are also means to
re-focus limited enforcement resources on those businesses that must be licensed because they present a real risk to the
public.
One example of a business worth re-examining is barbers. Barbers are covered by Provincial Health regulations, whether
licensed or not. Beyond the health interest, it is not clear that there is a significant consumer protection role for the city.
The city currently does not require a skills test for this trade as part of the licensing process. Therefore, anyone who meets
health and zoning requirements can cut hair. However, it is reasonable to believe that a bad barber would be subject to a
rapid and complete market correction. A bad haircut may cause some short term trauma, but is unlikely to cause lasting
personal or financial harm to the consumer. On the other hand, tattoo parlours are unlicensed in Toronto, and while subject
to health provisions, there may be broader public and consumer protection interest issues that recommend licensing, in
light of the permanent nature of the service.
It is also timely to re-examine the costs defined and collected through the licensing process. Not all departmental costs (i.e.
Departments other than Urban Planning and Development Services) are recognized and accommodated in the fee
estimation model. Although some licensed businesses are subject to health and other inspections, those costs are not
recovered through licence fees.
The administration of Licensing has also been restructured within a Municipal Licensing and Standards Division. Now is
an opportune time to revise the by-law to reflect the realities of the new organization, the new city, entering a new century.
Process:
It is recommended that if the review is approved, a detailed workplan be developed and presented to the Licensing
Sub-committee at its first meeting. The Licensing Sub-committee would oversee the review and would hear industry and
public deputations. Reports and recommendations would be made to the Planning and Transportation Committee from the
Licensing Sub-committee.
As a first step, staff would conduct a review of licensing regimes for a number of other major cities in Canada and the
USA, in order to develop a comparison of what BTO's are and are not the subject of licensing, and the rationale for so
doing. Staff would then compare the conditions to those existing in Toronto, giving consideration to the questions listed
below.
The Licensing Sub Committee would initially review all currently licensed categories and would apply the following tests:
a)Is there a clear definition of the municipal/public interest?
b) Is the BTO regulated by other city regulations, other agencies or other levels of government? Can and should the
regulation of the BTO be done another way or by another agency?
c) Is licensing the best regulatory option, the only regulatory option, or are others better or complementary (zoning,
health)?
d) What is a reasonable degree of monitoring? Is it annual inspection, intermittent inspection, a full re-check at the time of
licence renewal, or complaint-based review?
e) How can we best cross-reference other applicable law within a licensing by-law to ensure that actions are
complementary, not duplicative, nor unnecessarily complicated?
f) What is an appropriate cycle for licence renewal for each class of licence? (e.g. should there initially be annual licences,
and after a three-year probation, licence periods extending to three years, or should certain licences be annual renewal,
others two, three or even five-year renewals?
g) Which costs can legally be collected through licence fees under current legislation? Are all such costs being collected?
h) Should all costs be collected through the fee structure, or should a portion of the cost of the licensing process be raised
through general taxation?
i) What would the impact on fee revenues be under a significantly revised licensing regime?
The industry and public would be allowed appropriate opportunities to present their views at the Licensing
Sub-committee. The review would not re-open the issue of Taxi Licensing. The reforms to the taxi industry will continue
as directed by Council.
A series of reports would be presented to Planning and Transportation Committee recommending phased changes in the
Licensing By-law and implementation plans.
Conclusion:
It is timely to conduct a full review of the city's Licensing By-law. The review should be conducted in the next 12-18
months and recommendations should be forwarded to Planning and Transportation Committee through the Licensing
Sub-committee. The initiative should fully review the categories of businesses currently licensed, emerging businesses that
should be considered for licensing, the fee-setting methodology, and opportunities to use licence fees to fund a broader
range of city services to licensed businesses.
Contact Name:
James Ridge
Acting Commissioner
Urban Planning and Development Services
12th Floor, East Tower
Toronto City Hall
tel: 397-4154; fax: 397-4088
___________________________________
James Ridge
Acting Commissioner
Urban Planning and Development Services
