Detroit updates rules to cut red tape for businesses
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Getting a business license in Detroit just got easier after City Council passed major rule changes this week.
Why it matters: Small business owners in Detroit have dealt with laborious licensing processes for years, slowing opening timelines, costing them too much money or leading to unlicensed operations.
The big picture: The city wants to fix a longtime dynamic in which established, well-financed operators have an easier time getting through the complexities, while smaller mom-and-pop shops get excluded.
What they're saying: Wafa Dinaro, executive director of the New Economy Initiative that supports entrepreneurs, says removing barriers makes it "easier for entrepreneurs to turn their ideas into businesses and really continue to grow the economy and create a thriving city" for people who find navigating bureaucracy difficult.
Case in point: City deputy COO Andie Taverna laid out to City Council what it takes for a restaurant with outdoor dining to open here.
- The process takes nine to 11 months, requiring the owner to work with six city departments and six tech systems, go through 13 inspections and pay $4,300 in fees, Taverna said.
State of play: The updates, passed unanimously by council Tuesday, include several major changes.
- Instead of needing two separate licenses from the health and building departments to open, restaurants — the city's most common business type — will need just one license that covers health, building and fire safety.
- Instead of going through a four-week process to renew licenses every year, businesses will do it every two years.
- Businesses can also get provisional licenses while they apply for their licenses, and they can open while paying off fees.
Between the lines: The city also plans to integrate several of its confusing technology systems, and start a "concierge team" to give businesses a place to go for help.
Reality check: Council President Pro Tem James Tate brought up concerns about replacing the revenue that would be lost with these changes.
- City projections show the buildings department will lose around $750,000 a year because of the changes, out of the department's total $2.2 million in business license revenue.
- City officials told council that they expect city revenue to increase as more businesses open, but can't quantify that increase. They also said it's the right policy move to grow the city's economy, despite the possible cost.
The bottom line: "If they're making it easier to do business in Detroit, more businesses are going to want to be here, and they're going to get more small businesses to start and scale here," Dinaro says.