Excessive licensing, local regulations delay new businesses from opening, prevent established businesses from growing
LAS VEGAS — Sarkis Arshakuni opened Hookah Masters lounge in April 2012, hoping to establish a new nightlife spot on Las Vegas’ west side.
Eight months later, the City of Las Vegas realized it had made a mistake in Arshakuni’s licensing process and pulled his special use permit, denying his business its nightclub and thousands of dollars in revenue.
“[City officials] checked one box instead of the other,” said Arshakuni. “Without any warning, they told me the license was being pulled. Not for something I did wrong, but because they had made a mistake and they finally found their mistake after eight months.”
Unfortunately, Arshakuni’s experience with local licensing requirements is not uncommon. As detailed in “The Path to Sustainable Prosperity,” a report released recently by the Nevada Policy Research Institute, the free-market think tank that publishes Nevada Journal, the state’s local licenses and regulations are so onerous that the idea of the Silver State as “business-friendly” no longer holds true.
“Nevada is actually among the states most hostile to entrepreneurship,” wrote Geoffrey Lawrence, NPRI’s deputy policy director and the report’s author.
“Nevada could become more business-friendly by eliminating state business subsidies, reducing or eliminating state and local licensing fees and filing requirements, easing restrictions on labor and streamlining the state’s regulatory structure.”
Amy Groves agrees that characterizations of Nevada as “business-friendly” are misleading. Groves owns Nevada’s Finest Properties, LLC, a real estate and home owners association management company, and pays over 30 different taxes, licenses and fees each year just to stay in business.
“We got our state and [Clark] county business licenses, but we also need licenses in each city we sell in, so we also needed North Las Vegas, Las Vegas and Henderson” real-estate licenses, said Groves.
Then, “about a year ago, [lawmakers] decided that brokers who own their own company needed to get their own license, too, so now we have two Clark County — it’s double licensing.”
Groves says her agents spend $1,800 a year in licenses, and that qualified realtors who could help Nevada’s struggling housing market are staying away because it’s too expensive to do business.
“We have people from California and Arizona who want to come here and [sell real estate] but they take a look at the costs and decide they don’t want to deal with them,” she said.
“Now as an employer, I want to hire new people, but I can’t hire anybody because of the uncertainty with all the fees, so even people who do want to come here find that employers can’t always afford to hire them.”
Groves suggests lawmakers “cut the bureaucracies and let people work” — a sentiment that Pat Dingle shares. Dingle has owned the nonprofit Las Vegas Zoo for over 30 years, but in the past two years his organization has been hit with new regulations and fines he never thought he’d see in Nevada.
“This year, it’s going to be approaching $50,000 [that] we’ll be spending on various city, county, and state fines,” said Dingle. “Things that zoos, like the San Diego and Bronx zoos, do are suddenly unacceptable here.”
The City of Las Vegas fined the zoo $13,000 for electrical violations, such as having old wall plugs and three-prong adaptors. The Nevada Department of Labor also audited the zoo for the first time in its existence, and the Nevada Occupational Safety and Health Administration (OSHA) not only wanted to fine the zoo, but also insisted on writing the zoo’s animal-care policy.
“The [OSHA] district manager told me he’s never so much as owned a dog but he knows they can bite,” Dingle said. “Most of their suggestions, such as wearing riot gear when handling the Barbary apes, would frighten the animals and do more harm than good.”
The piling-on from various government agencies became so intrusive that Dingle hired a lawyer, Shan Davis, to help fight back. Davis, who has handled previous cases of businesses being overrun by government agencies, says part of the problem is that the local bureaucracies don’t hold themselves accountable.
“Sometimes these agencies don’t realize how much red tape they’re tying people up in,” says Davis. “It’s not government working for people or protecting people: It’s the bureaucracy, in my mind, tying the hands of a local business.”
Currently, Dingle and Davis have won their challenge against state OSHA, preventing OSHA from writing zoo policy. They’re still fighting other agencies such as the state department of labor.
Carolyn Davis (no relation) also knows what it’s like to deal with a government that isn’t working for the people. When her son, Lance, was laid off from his construction job last summer, they decided to start their own moving business.
Six weeks into business, Lance responded to a call from an individual for a move. Lance and his partner showed up at the individual’s address, only to find out it was a sting operation by the Nevada Transportation Authority (NTA) targeting the start-up for lacking NTA licenses.
“If it hadn’t happened to me, I wouldn’t have believed it,” says Carolyn Davis.
The NTA requires all potential moving companies, as well as taxicab and limousine companies, to submit a lengthy application that includes a 12-month statement of income and a business plan. The application is then reviewed by other “interested parties” — mainly, competing companies that can object to the application and thus prevent it from entering the market.
The entire process, Davis was told, takes six to 18 months.
Davis was fined $1,000 — $500 for doing business without a license and $500 for advertising without a license. She also had to pay another $498 to get their truck out of impoundment.
“All of this, just to start a business,” Davis said.
“Maybe I’m just ignorant of the process, but how can a business get off the ground when you’re waiting over a year just to be approved for a license? That doesn’t make any sense to the businessperson.”
Scott Godino, Jr., owner of the Born and Raised Las Vegas bar, also spent months fighting local government. Like Arshakuni, whose business earned most of its revenue at night, Godino found his bar also would do best during the late night “graveyard” hours. That made it imperative for him to get the 2 a.m-6 a.m. hours of operation restriction on his location lifted.
“I had to spend upwards of $20,000 in attorney’s fees, just to get something like that lifted,” he said.
Godino had numerous meetings with the Clark County Board of Commissioners about lifting the ordinance, but he discovered too many of the local representatives were more interested in political posturing than in helping him out.
“A lot of [politicians] campaign on being business-friendly, but they don’t really do it,” he said.
“Businesses are supposed to grow. They’re our economic leader in this country. They’re why America is the way it is: because you can come here and follow your dreams and open your own business.”
Update: Ms. Groves cancelled her licenses with the City of Las Vegas and no longer holds any licenses within the city's jurisdiction. Mr. Godino also corrected he met with Clark County commissioners and the Planning Commission, not the City of Las Vegas as originally stated.