From Batting Nets to 'Hide Haulers,' Almost Everything Requires a License in Detroit

Entrepreneurs looking to open a business in Detroit face licensing fees of up to $1,500 depending on the type of business. If a business isn't licensed or is not licensed properly, it is subject to stiff fines or even a complete shutdown.

According to documents on the city of Detroit's website, furniture movers must pay a $178 licensing fee and $25 each for more than one vehicle plate. Anyone looking to open a bathhouse in the city will have to pay a $138 licensing fee while animal hide haulers must pay $35 for the first plate and $12 for the second plate.

Junk collectors must pay $20 for a required button, and junkyard dealers are required to pay a $432 fee. Businesses with a baseball batting practice net must pay a $35 fee, and other businesses face fees of their own.

Hotel, theater and restaurant licensing fees are adjusted according to the number of rooms or seats they offer; stadiums or sports arenas must pay a fixed fee of $984.

The city lists seven steps to obtain a business license. Prospective business owners must get a building permit; choose and register a business name; acquire a sales tax number or federal tax ID number; and apply for the license with the city, which requires 15 documents. After the application is submitted, business inspections must be scheduled, and then the annual license is approved and issued.

In 2013, Detroit Mayor Dave Bing’s “Operation Compliance,” which was widely criticized at the time, attempted to shut down 20 businesses a week for violating city zoning ordinances and property maintenance codes.

The initiative, carried out by Detroit’s Buildings, Safety Engineering & Environmental Department, ceased shortly after Mayor Mike Duggan took office. As of January 2015, Operation Compliance closed 383 businesses and notified 898 businesses they would be closed if their violations continued.

Duggan’s administration has distanced itself from Operation Compliance and the webpage for the initiative disappeared from the city’s website after inquiries were made.

“This administration’s approach is much more cooperative and business friendly," said city spokesman John Roach. He added that it "involves more direct outreach and education to business owners so they can know what they need to get into and to stay in compliance."

The initiative’s end was too little too late for Kristyn Koth, owner of Pink FlamInGo!, a mobile restaurant known for its organic food and Airstream trailer. Her business was forced into a hiatus in 2011 after it was flooded by tickets from the city.

On top of facing licensing fees and tickets, food trucks must comply with Detroit’s zoning laws that require food trucks to stay 500 feet from existing restaurants. Koth hasn’t done business in Detroit since 2012, she said.

“We exited the Detroit market because of the challenges,” Koth said, noting other food trucks try to steer clear of the city. Despite the setbacks and barriers, Koth said she’s open to returning Pink FlamInGo! to the city if the regulatory environment is favorable. She is currently focusing on catering in the Hamtramck area.

The licensing fee for mobile food vendors like Koth cost $180, according to documents on the city’s website.

Shikha Dalmia, a senior analyst for the Reason Foundation and Detroit resident, said the city has always required extensive licensing.

“Detroit historically has imposed far more licensing requirements than the rest of Michigan (which is no slacker among states). In 2006, it licensed 265 occupations compared to 200 or so by the state,” she said. “In addition to licensing, Detroit businesses face other red tape. For instance, a home-based business needs 70 or so building or equipment permits to get started. Hair braiders have to spend thousands of dollars and 1,500 hours in mandatory training for a cosmetology license.”

“All of this has thwarted a critical source of urban vitality — entrepreneurship by city residents — and that has served to make Detroit an economic basket case,” Dalmia said.