FROZEN OUT HOW TO THAW L.A.'S CHILLY BUSINESS CLIMATE.

Byline: Fred Gaines

EVERY year on Jan. 1, we are reminded of how blessed we are to live in Southern California. Hundreds of millions of people around the world turn on their televisions every New Year's morning to watch the Tournament of Roses parade and football game. Usually, Southern Californians are basking in sunlight and 70-degree temperatures, while the rest of the nation must wait for springtime to even think about planting roses.

While our meteorological climes in Los Angeles are to be envied, the business climate is quite another story. In relative terms, Los Angeles is the Buffalo of business climates - practicably intolerable any time of the year.

The clearest example is business taxes. Los Angeles' are higher than those in any other city in Southern California: the license fees, utility taxes, development fees are tops in the region. In these cases, however, being ``the tops'' is not a good thing.

In addition, building a physical presence for your business, if you must start from the ground up, is as difficult as it is expensive in Los Angeles. Well-intentioned efforts to divest planning decisions to communities have led to delaying the process and empowering NIMBYs - those ever-present people who say ``not in my backyard!'' Although the city's charter provides time lines for setting hearings and appeals of planning decisions, it does not regulate the time the bureaucracy may take to provide the necessary framework for the process to move forward.

A final nail in the coffin of Los Angeles' business climate is that, more than any other major city in the nation, Los Angeles must rely on its own. State and federal dollars that flow freely to towns like Washington, D.C., Chicago, New York and San Francisco are comparatively sparse in Los Angeles. This outside money pays for things like hospitals, school construction and transportation infrastructure. Without it, Los Angeles and its businesses are at a comparative disadvantage and must seek to make do by themselves, only adding to the local tax burden.

Fortunately, business climates can be changed. Unlike changes in global climates, the process need not be glacial, and the effects - the creation of jobs and the improvements in our communities - will necessarily be positive.

During last year's campaign over cityhood, residents and businesses in the Valley identified several complaints they had with the city of Los Angeles: business taxes are too high, the government is too centralized, bureaucracy encumbers the development of new and existing businesses, and Los Angeles fails to get its fair share of money from Sacramento and Washington, to name a few. In the election's aftermath, groups like VICA - the Valley Industry and Commerce Association - are seeking to have their city government redress these grievances.

The most egregious of these problems is the Los Angeles city gross receipts tax. Regardless of whether a business makes a profit or not, all businesses, large and small, must give a portion of all money they take in to the city, just to do business here in Los Angeles. This tax is regressive, expensive, unfair and difficult for the city to collect. The city needs to throw it out and start over. For many years, VICA has advocated the study of alternatives to the gross receipts tax. We are hopeful that 2003 will bring the beginning of this process.

In 1999, the City Council put a new charter before the voters. Born from the idea of decentralizing city services through a borough system, the new charter created regional planning commissions and advisory neighborhood councils. This was an incrementally positive step.

However, while the city's governance has decentralized, its government has not. City Hall grows more and more remote as the freeways become ever more congested. The vast distances from point to point in Los Angeles are at the core of the call for a system of boroughs - or something - that will put the functions of City Hall into the city's neighborhoods.

Mayor James Hahn has announced the formation of his TeamWork LA plan, which will decentralize the delivery of neighborhood services into distinct, identifiable regions across the city. Call it ``boroughs lite,'' or whatever you may, this system could go a long way toward improving service delivery for Los Angeles residents and businesses and toward bringing accountability to the city bureaucracy.

Further decentralization is also needed in the planning process. Although the commissioners for the new Area Planning Commissions come from various parts of Los Angeles, the staff, which does the yeoman's work, is the same downtown bureaucracy.

Getting approval for new developments can take months to years - even for the simplest of projects. For a city that has a shortage of housing and plans to redevelop its neighborhoods, this is unacceptable. The Hahn administration needs to invest in planning officers to break up this logjam, then revisit the recommendations of its predecessor's Permit Streamlining Commission.

Building a city that works for its stakeholders - residents and business alike - requires a sound financial footing. Per capita, however, Los Angeles receives less money from Sacramento and Washington than do major cities across the state and nation. These subventions, as they are called, pay for health care, roads, schools and more, all critical to the infrastructure of a world-class economy.

Los Angeles must identify why there is such disparity in funding, and then work harder, along with our legislative and congressional delegations, to get our fair share, especially in difficult budget times.

Businesses are, at best, taken for granted in our city and, at worst, despised for turning a profit. Too often, the link between job creation and economic growth is overlooked. Neither jobs nor wealth is created through mandated benefits or pay scales. Los Angeles leaders must realize that profitable businesses are the ones that expand and create jobs and provide benefits for people in Los Angeles.

While Los Angeles' business climate might be described as being as frigid as January in Buffalo, there is hope that things can - and will - get better. The Valley cityhood movement has laid out the road map; now all we have to do is follow it.

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Photo:

(color) no caption (Los Angeles, people climbing up a snow mountain)

Jon Gerung/Staff Artist