The city of Vernon is considered one of the area’s business-friendliest towns. The question is, for what kinds of businesses?

Stepped-up enforcement of rules for parking and loading trucks, along with a recent increase in the parcel tax for warehousing, has many property owners wondering whether they’re wanted any more. Some have branded the situation punitive to warehouse operations because it hurts property values and makes it nearly impossible to sell many parcels.

“Vernon isn’t the place it used to be. It used to be a very friendly environment for industry and it’s not anymore, particularly not for property owners,” said Jim Hilands, senior associate at Heger Realty Corp.

City officials contend they are merely making warehouse and distribution operations pay their fair share while taking steps to improve Vernon’s infrastructure and traffic along its narrow streets.

“The city set a goal to retain and maintain its manufacturing base. We did see a trend toward warehouse and distribution moving into the city,” said Kevin Wilson, director of community services. “We needed to make changes to stop the conversion to warehouse properties.”

There is no community quite like Vernon in Los Angeles County. Its large employers attract a daytime population of 50,000, but at night that number drops to about 100, with most living in city-owned housing. The five-square-mile city southeast of L.A. was founded in 1905 with the motto “exclusively industrial.” And the gritty enclave indeed has a longstanding reputation for welcoming industries unwanted elsewhere.

“Vernon was established as an industrial city and our forefathers wanted to continue that history,” Wilson said.

The city is still home to numerous manufacturing operations, including the Farmer John slaughterhouse, Kal Kan, Clorox, some steel and hazardous waste recycling plants, and other food processing, garment and textile firms.

Vernon wants to maintain its manufacturing base because such operations create a large number of jobs and don’t generate as much truck traffic as warehouses, Wilson said. And the city makes more money from selling power and water to energy-intensive manufacturing plants than it does from warehouses.

Yet manufacturing has been trickling out for years, beset by foreign competition. At the same time, the L.A. area has increasingly shifted to a service and trade economy, which has fueled warehousing and distribution growth in centrally located Vernon.

“The thing that’s got people in such a state of disagreement is that the city doesn’t want to recognize warehousing uses as industrial,” said Michael Del Santo of CB Richard Ellis, who does brokerage work in the area. “Most tenants in the marketplace today are warehousers. That’s what the market is dictating.”

While Vernon can’t prevent manufacturers from moving out, it is trying to put the brakes on warehouses moving in.

City codes were amended 10 years ago to encourage large industrial uses by establishing a minimum lot size. The city also mandated that warehouses be no larger than 50,000 square feet in most places a move that ironically fostered the growth of smaller warehouses.

But most unsettling to property owners are regulations concerning “non-conforming buildings.”

Owners have until 2004 to comply with existing rules for minimum set-backs from the street, and until 2009 to provide adequate space to park, load and maneuver large trucks. If a non-conforming building remains vacant for over a year, it must be brought into compliance before it can be occupied. The rules mean that in many cases, owners will have to demolish parts of their buildings to provide space for parking and loading.

While the deadline is still years off, property owners say the restrictions will make it hard to either sell their buildings or enter into long-term leases.

“They built them to the standards of the city of Vernon. It seems to me if there’s a penalty involved, the city should pay it. (The owners) are not the ones who made the rules,” Hilands said. “People I represent are looking for their retirement out of buildings built in the ’40s, ’50s and ’60s, and they face having them demolished to meet the change of mind of the city.”

Edward Ferguson, president of Madsen Electric Supply, said the rules have hampered plans for his three adjacent parcels.

“Each has no value today, and even if you combine them, you can’t put much of a building on it to satisfy all their requirements,” Ferguson said. “I believe the building is going to have to be torn down in 2009 because it’s not set back from the street as they would require it today because they widened Washington Boulevard.”

Even if the parcels are combined into one, they are too small to be developed under the city’s minimum rule of three-quarters of an acre, Ferguson said.

“I would like to build a 10,000-square-foot building,” he said. “But with the way the city requires (space for) truck turning and driveways, I’m not sure I could accomplish that.”

Then there’s the parcel tax, which just went from a penny per square foot to 20 cents per square foot. That tax is passed along to tenants.

“It will further run distribution guys out of town,” said David Hess, a broker with Cushman & Wakefield. “That’s an awfully big burden to bear. But adjacent markets will move their rents up.”

Wilson said warehousing and transportation uses provide only 4.5 percent of city revenues, yet they take up at least a third of the land and generate the most truck traffic. “We feel those types of businesses should be paying their fair share toward the cost of operating the city,” Wilson said.