The City Council on Tuesday gave tentative approval to an ordinance requiring owners of health clubs to reimburse members if the clubs go out of business.
The law requires fitness club operators to purchase a bond that is worth $75,000 or 5% of their gross income for the previous year, whichever is greater. The money would be used to pay back unused portions of membership fees if a club closes.
The law was proposed last year in response to a rash of health club closures that left members out nearly $70,000 in fees, said Jeffrey Holtzman, consumer affairs attorney for the city attorney's office.
Most of the clubs that went out of business were under-financed and offered unrealistic bargain rates to attract customers, he said.
Nonprofit organizations and clubs that charge fees on a monthly, rather than on an annual, basis, are exempt from the proposed law which was unanimously approved after a first reading Tuesday.