Law Change Would Help Lawndale Landlords : Business licenses: A proposed shift in the fee system for landlords with five units or fewer would cut their costs.

Lawndale landlords who own five or fewer rental units would be eligible for refunds under a proposed amendment to a controversial business license fee imposed last summer.

The proposal, which comes before the City Council tonight, would reduce the fees and change the way they are structured so that landlords pay according to the total number of units they own rather than pay a separate fee for each parcel, Finance Director Judith Longman said.

Landlords who previously paid a business license fee of $139 on every parcel with five or fewer units would be charged $64, as long as their total number of units is five or fewer. Under the existing ordinance, for example, a landlord who owns two parcels, each containing two rental units, is charged $139 on each parcel, or a total of $278. Under the proposed amendment, the same landlord would pay only $64 since the total is fewer than five units.

If the council adopts the new ordinance, hundreds of people would be eligible for a refund, costing the city an estimated $100,000, Longman said.

The vote may be delayed because city officials are still awaiting an answer from the state Fair Political Practices Committee about whether council members who own rental property in the city can vote on the proposal.

“The question is, is it a conflict of interest?” Assistant City Atty. Bob Owen said. “I don’t think it is, but better safe than sorry.”

The $139 business license fee charged under the ordinance adopted in August, 1990, included a $25 application fee. To renew the license, the landlords pay $114 per parcel each year..

Under the pending proposal, the application fee would be eliminated.

The ordinance would also entitle property owners with five or fewer units to a credit for one unit. For instance, a homeowner who rents out an additional house on the property would not be charged a business license fee.

Under the proposal, landlords who provide false or incomplete information would be charged a penalty equal to 25% of the fees owed or $25, whichever is greater. The original ordinance sets the penalty at 10% of the fees owed for every month it was not paid, to a maximum of 100% of the amount owed.

The proposed amendment would give all those who paid higher fees under the original ordinance until May 31 to apply for the difference to be refunded.

Although the city had always charged business license fees on parcels with six or more units, the council decided last summer to charge all owners of rental units as a way to generate revenue. But soon after they adopted the new fees, council members complained that the fee structure was different from the one they thought they had approved.

“I think (the ordinance) was given to us under false pretenses,” Councilman William Johnson said in an interview this week. “When we voted on the ordinance, there was no dollar amount in it. . . . When we were discussing it, I was under the impression (the fees) would be a lot less.”

Lawndale resident Bob Cerny, who owns a rental unit next to his home, said he objected to the ordinance because landlords who own five units are charged the same amount as those who own just one.

“The way they have it is unfair,” he said. “If they’re going to tax rentals at all, they should tax every rental in the city at a nominal sum.”