Memorandum

City of Lawrence

City Attorney’s Office

TO:	Toni Ramirez Wheeler, City Attorney
FROM:	R. Scott Wagner, Management Analyst
CC:	Jonathan Douglass, Assistant to the City Manager and City Clerk
Date:	February 23, 2012
RE:	Scrap Metal Dealer Registration

In 2011, the Kansas Legislature passed House Bill 2312.  The bill requires all cities to have in place a registration process for scrap metal dealers.  The bill requires the Kansas Attorney General to make forms available for registration as a scrap metal dealer.  The Attorney General’s office has posted those forms on its website.  The ordinance codifies requirements of the legislation and includes the following provisions:

• The initial registration fee is $400, which is within the range set by HB2312.
• The renewal fee is $50, which is within the range set by HB2312.
• Initial registration is valid for 10 (ten) years and can be renewed for 10 (ten) year periods.
• Purchasing scrap metal without being registered is a Class A Misdemeanor punishable by a maximum fine of $2,500 and / or a jail term of up to one year.
• The City must notify the Chief of Police within 10 (ten) days of receiving a dealer’s registration.

Ordinance No. 8691 creates Article 18 of Chapter 6 of the Code of the City of Lawrence.  The ordinance will become effective upon publication.

The City Clerk’s office will notify known scrap metal dealers within the City limits of the registration requirements.

Fee Justification

The level of the fee was established after reviewing the following criteria, per the city’s fee policy:

• What is the service?  Accepting registrations of scrap metal dealers.
• Why does the city provide the service?  The service is mandated by State law.
• Who uses the service? Scrap metal dealers.
• How much does it cost the city to provide the service?  The City Clerk’s Office will have to accept the registration application, process the license and payment in our licensing system, and forward the application to the Chief of Police. The police department will have to review the background check(s) submitted for the applicant, applicant’s parents (if applicant is under 18), applicant’s spouse, and any manager, officer or director of a corporation, to check eligibility under the State statutes. The Planning Division will have to verify that the use is authorized by city zoning regulations. The payment would have to be processed by the Finance Department in our financial system. The City Clerk’s Office would put the registration in a licensing memo for City Commission consideration. In all, at least 7 people in 4 departments are likely to be involved in the processing of the registration. In addition, overhead costs for the financial and licensing systems, email and scanning equipment, and facilities, will be incurred. Records of the registration would have to be kept for at least the ten years of the initial registration period.      
• How much of the cost of the service is subsidized by general tax revenue?  None.
• How much of the cost does the city intend to recover through fees and charges? 100%. The registration is for a private business activity that is required by the State of Kansas to register. Staff does not believe it is appropriate to subsidize the cost of the registration process through tax funds.
• How many people or businesses use the service?  Since adoption of the State legislation, one scrap metal dealer has already turned in registration paperwork. There are likely other scrap metal dealers that should register.
• How do the City’s fees compare with other cities or with private businesses? A quick survey of some comparison cities yielded the following information on other cities’ fees.

Wichita	$400.00 due annually on date of approval. New applicant fee of $1.00. $60.00 fee for background check may be invoiced by PD.
Wyandotte County/Kansas City, Kansas	Scrap Metal Dealer is a ‘sub-license’ to the occupation tax they charge for salvage yards.  The occupation tax is based on the square feet of the salvage yard. The scrap metal dealer registration is $50.00 for 12 months.
Overland Park	$400.00 for 10 years. $50.00 renewals.
Topeka	Current draft legislation proposes $400.00 registration, $40.00 renewal.
Olathe	No legislation yet drafted.
Manhattan	$100 for 10 years. $25 renewal for another 10 years.

• What part of the City Code or other legal authority guides the fee? Ordinance No. 8691 would guide this fee, if adopted.
• How will the City collect the fee? Fees can currently be to the City Clerk’s Office via cash or check. We expect to be able to accept credit cards later this year.

Action Requested:  Adopt Ordinance 8691 enacting scrap metal dealer registration requirements.