Now that the law has been revised, the Department of Consumer Affairs has begun accepting applications for car wash licenses and will begin enforcement on Dec. 4. Applicants will need to fulfill several licensing requirements, including:
● Submit a license application
● Submit a car wash self-certification
● Provide a sales tax identification number or a certificate of authority application confirmation number from the state Department of Taxation and Finance
● Provide a $150,000 car wash bond
● If applicable, provide copies of workers’ compensation insurance, disability benefits insurance, commercial general liability insurance and unemployment insurance
● Pay a license fee
The bond requirement in particular may be new to some car wash owners. Surety bonds work as three-party agreements that guarantee that a bonded party will comply with state or city rules and regulations.
Car wash owners in the city need to comply with the requirements for licensing and conducting business set out in the Car Wash Accountability Act.
If the bonded car wash owner violates the law, a claim can be made against his bond, and the surety may pay compensation to claimants up to the full amount of the bond. In return, the car wash owner must repay the surety for any compensation it extends.
Car wash bonds can be used to provide coverage for:
● Fines, penalties and obligations to the city
● Damages received by persons who have received car wash services from the bondholder
● Wages owed to employees
If there are no such violations on behalf of the bonded owner, the only cost the owner carries is the premium paid to obtain the bond in the first place.
Car wash owners can influence the rate at which they get bonded. The most important cost factor is personal credit score: the higher the score, the lower the rate. By improving their credit, owners can improve their bond rate.
Sureties also take into account factors such as financial statements, personal assets and liquidity, so even if owners don’t have perfect scores, there may be ways for them to lower their bond rates.