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Officials eye rules for business licenses for renting homes

By Deangelo McDaniel · 340-2469

If you derive income from renting apartments or a single-family home in a municipality, should you be required to purchase a business license like the hardware-store owner?

Most municipalities in the area say you should. Hartselle has been the exception, but that may be changing.

As area governments move to comply with the Business License Reform Act of 2006, officials are looking at who is required to purchase a business license.

Surprisingly, council members in some cities like Hartselle and Decatur are learning that people can rent as many single-family homes as they want without purchasing a business license.

“This is not right,” council President Kenny Thompson of Hartselle said. “I own a beach home in Gulf Shores, which I rent out some of the time, and I have to purchase a business license.”

The act, which is designed to standardize business license codes throughout the state, has to be followed, beginning Jan. 1.

With few exceptions, the legislation does not mandate how much and what municipal governments should charge for business licenses.

Some of the larger cities in the area, like Decatur and Athens, require people who rent apartments to purchase business licenses.

But Decatur’s ordinance, which city leaders revised in 1999, does not require people who rent houses to purchase a license, no matter how many homes they rent.

An out-of-state firm or corporation whose sole business is to rent homes in Decatur would be exempt from buying a business license.

Mayor Don Kyle was not available for comment. But, two months ago in an editorial board meeting with The Daily, he opposed requiring people who derive income from renting houses to buy a license.

Council President Billy Jackson disagrees. Requiring people who make income on rent to buy a license, gives the city a method to track absent landlords, he said.

“I know there needs to be some guidelines in place, but we need to take a look at this,” Jackson said.

He said a large percent of the land in his District 1 is rental property. Jackson said a lot of the people who own the property rent it and don’t care about the community.

“This would give the city a way to find the landowners, especially when we have problems on their property,” he said.

Decatur does require people who rent commercial property to buy a license.

Athens has one of the toughest business ordinances in the area. There is no exception for people who rent commercial property, duplexes or apartment units, City Clerk John Hamilton said.

If you rent a single-family house that generates more than $5,000 in income annually, you are required to purchase a business license.

Hamilton said they will keep this section in the ordinance, but may recommend that the council increase the amount to $10,000 for an exemption.

“This is one of the few areas we have not made a final decision for the new ordinance,” he said.

Apartment owners in Moulton have been buying business licenses for four years, according to City Clerk Shirley Gilley.

“They’ve always been required to get one, but we haven’t been enforcing it until a few years ago,” Gilley said.

Significant changes

Hartselle is the city where the most significant changes may come. The city’s business license ordinance has been the same since the 1970s. Hartselle has never required apartment owners or people who rent commercial buildings to buy a business license.

Like Thompson, Councilman Bill Smelser owns a beach house in Gulf Shores.

“These people that own apartments and rent commercial property should be buying a license,” Smelser said. “They are making income in Hartselle like other businesses.”

As for single-family homes, Hartselle talked about requiring people who rent two or more houses to buy a license.

The council did not touch on enforcement, but Athens believes it has the answers.

Hamilton said they rely on city employees, Athens Utilities and renters to help identify property owners.

When the city mails license renewals, for example, businesses are asked if they rent or own the property.

“If they rent the property, they have to name their landlord,” Hamilton said.

Hamilton said they also go to Athens Utilities when people request utility services.

“It’s not perfect, and we don’t have an unlimited staff, but we do what we can to enforce the ordinance,” he said.

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