BUSINESS: BREAKUP WOULD BRING NEEDED TAX REFORM.

Byline: Evan Pondel and James Nash Staff Writers

Three large and influential business organizations in the San Fernando Valley have endorsed secession, saying a Valley city would spawn a more favorable corporate climate and better quality of life for its residents.

The United Chambers of Commerce, Southland Regional Association of Realtors and the Valley Industry and Commerce Association have overwhelmingly voted to support cityhood.

``It is my belief that the creation of a new Valley city will be good for business on both sides of the hill,'' says VICA Chairman Fred Gaines, a Woodland Hills attorney. ``It will allow each municipality the opportunity to reinvent, reinvest and re-energize itself to provide better services at less cost to its business and residential customers.''

Many local business owners say companies would be encouraged to stay in the area if leaders of a new Valley city reformed the business tax - officially known as the gross receipts tax - which currently is from 10 to 50 times higher in Los Angeles than in nearby cities such as Calabasas and Santa Clarita.

Under an eight-tiered system, about 240,000 businesses in Los Angeles pay $1.18 to $5.91 per $1,000 of their gross receipts - the highest in the county. Critics say this drives high-volume retailers to other cities and helps to explain why Los Angeles has lower per-capita sales tax revenue than most other cities.

The United Chambers, representing some 8,000 Valley businesses, cites the possibility of lower gross-receipts taxes, as well as the opportunity to establish more affordable housing, as reasons for supporting secession.

Members of the Realtors group note that residents of a Valley city would no longer have to pay a documentary transfer tax, which in Los Angeles amounts to $4.50 for each $1,000 on the sale price of a property - or about $1,400 on the sale of a median-price home.

Los Angeles County charges a separate documentary transfer tax of $1.10 per $1,000 of the sale price - a levy that would continue after secession, with the Valley city receiving a proportionate share of the revenue.

Some Realtors also say they believe a Valley-based political leadership would concentrate on Valley needs - such as fixing streets and revitalizing neighborhoods and commercial corridors - leading to higher real estate values and an improved quality of life.

While Valley business groups support Measure F, the Los Angeles Area Chamber of Commerce and other associations outside the Valley oppose it.

They also say that Los Angeles officials are trying to make the city more business-friendly, proposing exemptions from the business tax for new and start-up companies in the city and the elimination of ``pass-through'' taxes, which occasionally results in double-taxation.

Staff Writer Harrison Sheppard contributed to this story.