City Council mulls preference for small businesses
June 18, 2010
SOUTH LAKE TAHOE, Calif. – Small, locally licensed businesses may soon find it easier to win public works project contracts in the city.
On Tuesday, the South Lake Tahoe City Council is set to discuss an ordinance that would give the city a degree of discretion when it comes choosing local contractors for its projects.
State law generally requires public projects greater than $5,000 to be awarded to the lowest responsible bidder. But a code enacted in 2002 allows cities to give some preference to small businesses, according to a June 15 staff report from City Attorney Patrick Enright.
As proposed, South Lake Tahoe’s ordinance would allow the city to choose a small business for a contract even if they are not the lowest responsible bidder. The small business would have to be within 5 percent of the lowest responsible bid to qualify, Enright said.
The proposed ordinance defines a “small business” as one with a city-issued business license, 25 or fewer employees and gross receipts averaging $4 million or less over the past three tax years, Enright said.
A prime contractor that is not a small business can also qualify if 25 percent or more of their subcontractors meet the small business definition.
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As currently written, the ordinance would leave the decision up to city staff to determine exactly what documentation is needed to ensure a business qualifies as “small.”
Because a “small business” needs a city business license to qualify, staff should have access to at least a single year’s worth of gross receipts, but would need to verify the number of employees, Enright said.
While there are no direct fiscal impacts to the general fund from the ordinance, the city could be required to pay more for certain public works projects if the ordinance passes, Enright said.
The City Council meets starting at 9 a.m. at the Lake Tahoe Airport, 1901 Airport Road. To view a full meeting agenda, visit: http://www.cityofslt.us.