Many very big businesses have started in very small ways.
Jeff Bezos started Amazon out of a garage.
The first Harley-Davidson motorcycle was built in a wood shed.
Under Armour’s Kevin Plank sold athletic gear out of his grandmother’s townhouse.
It’s the kind of entrepreneurial spirit that has been evoked in an unfolding debate at the Capitol over a bill banning local governments from permitting home-based businesses.
The bill would prohibit local governments from banning a “no-impact” home-based business but would provide latitude from some regulations.
There are an estimated 33.3 million small businesses currently operating in the United States, including more than 19 million of them that are home-based.
The Small Business Administration reports that 60% of all businesses without staff are home-based and there are roughly 201,500 businesses in Kansas with no employees.
Supporters of the bill say that “no impact” home-based businesses are at risk of being crushed by regulations imposed by local governments.
Local governments say nothing less is at stake than their constitutional power to balance the rights of residents to live in peace with the rights of someone to own a business.
They say the bill could lead to “full blown” commercial operations out of residences and
accessory structures, rather than an incidental business supporting the resident.
The bill, sponsored by Republican state Rep. Adam Turk of Shawnee, was among more than four dozen that were given the OK to advance past turnaround by the House speaker.
“This bill will protect mothers. It will protect households. It will protect the people and ensure their right to making a living,” Turk said in testifying for the bill.
Turk said the intent of the legislation is to bring consistency to how cities enforce regulations across the state.
“It would be great if every little government across the state were on all the same page, but they’re not,” Turk said.
“I was blown away to find out that there are municipalities across the state that restrict this type of thing,” he said.
The bill defines a “no-impact home business” as one where lawful goods or services are produced or sold on residential property by the owner or tenant.
The businesses’ on-site employees and clients must not exceed the occupancy limit for the residential property and must not generate on-street parking or substantially more traffic.
The bill bans businesses that sell illegal drugs or alcoholic liquor, operate or maintain a drug or alcohol recovery home, sell pornography or operate an adult-oriented business.
A homes association agreement, deed restrictions or covenants could still prohibit or restrict a home-based business under the bill.
A local government could adopt some narrowly tailored regulations for fire and building codes, health and sanitation, traffic control, noise control and ensuring that the business activity is compatible with residential used.
The question of whether a regulation complies with the law must be settled in court.
The local government that enacts the regulation must establish by clear and convincing
evidence that the regulation complies with the law.
The staff attorney for the House local government committee said local governments would have some ability to regulate traffic related to home-based business under the bill but added that could be a case-by-case situation.
A version of this type of bill is advocated by the American Legislative Exchange Council.
It was supported by Americans for Prosperity, the Kansas Chamber of Commerce, the Goldwater Institute, the National Federation of Independent Business and the Kansas Justice Institute, an arm of the Kansas Policy Institute.
The Kansas Justice Institute cited its lawsuit against the city of Ottawa over a home-based restriction that kept a woman from producing honey with bees as an example of an overly burdensome restriction on home-based businesses.
“The best solution is not to litigate every case, but to have a reasonable public policy in the state that balances the interests of home-based businesses and the legitimate needs of the local government to regulate activities,” said former House Speaker Mike O’Neal, representing the Kansas Justice Institute.
“This is an attempt to limit the amount of litigation and actually have a balanced outline of what you can do and what you can’t do,” O’Neal said.
Kansas cities came out against the bill, saying it would restrict their ability to limit the number of employees, work hours and sound nuisance issues for any commercial project in a residential area.
Spencer Duncan, lobbyist for the League of Kansas Municipalities, said cities aren’t shutting down cosmetics sellers, Tupperware dealers, salons and piano teachers.
He objected to one provision of the bill that would let the courts resolve conflicts over what regulations could comply with the law.
“What if there’s a conflict? It basically says, ‘Go let the courts decide.’ With respect, we like legislation that’s a little clearer than that and doesn’t say just run to the courts when you have a problem,” Duncan said.
Duncan cautioned that the bill could lead to homeowners enlarging their garages to run a body shop or pave over their front yards to create a parking lot.
“I think we need to do a little more work on this because the well of depth that it reaches to and the extension of where it can be put out is very problematic,” he said.
Jay Hall, general counsel for the Kansas Association of Counties, told lawmakers that enforcement of a law like the one proposed would still be inconsistent.
Hall said enforcement of regulations on home-based businesses tend to result more from neighbor complaints than inspectors patrolling subdivisions looking for violations.
“You could run the same business in three or four different neighborhoods and depending on who your neighbors are and whether or not they like you and whether or not what they consider to be more traffic or less traffic…dictate whether they complain about that to the city or the county,” he said.
“While this bill intends to bring consistency, it really is going to be based on what the thoughts of the people who live in that area are,” he said.
“If it is truly a no-impact business and nobody complains about it because there are no impacts, then the county will probably never touch it because the county will probably never find out about it,” he said.
In written testimony to the committee, Overland Park said the bill could violate the federal Fair Housing Act’s prohibition of disability discrimination.
The city said the bill prevents a no-impact business from operating or maintaining a structured sober living home for alcohol-based recovery.
Testifying for the bill, Dan Murray of the independent business group, reminded lawmakers of what could be at stake for the future.
“Our next major employer could start in a garage. We don’t know,” Murray said.
“We want to do everything we can to encourage entrepreneurship in the state of Kansas.”
