City of L.A. Ripped in Business Survey

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Almost three-quarters of L.A. businesses view the city as unfriendly to business, according to a survey released last week by the Los Angeles County Business Federation.

The annual survey of business conditions found that 74 percent of business respondents in Los Angeles said the city is not friendly to business. Meanwhile, 44 percent of businesses in other cities in the county said that their cities were unfriendly to business.

The L.A. businesses cited the city’s business taxes, bureaucracy, and the length of time it takes to get permits and licenses as major problems.

“This is definitely not a vote of confidence in the city,” said David Fleming, a founder of the business group, known as BizFed.

The federation was formed two years ago in an attempt to increase local business clout and counterbalance the influence of unions on local government. It has since grown to include 72 business organizations representing more than 150,000 businesses.

The business-unfriendly findings were released last week as part of the federation’s annual survey of 455 businesses throughout Los Angeles County. The businesses were surveyed in late September and early October.

The dismal view of the city’s business climate comes despite moves by city officials in recent years to slash business taxes and streamline some of the city’s Byzantine permit processes. In 2004, the City Council voted to cut business gross receipts taxes 15 percent over four years and eliminate the taxes for thousands of small businesses.

In responding to the findings of the survey, city officials pointed to those and other accomplishments.

“The city of L.A. has worked to become more business-friendly,” council President Eric Garcetti said. “In the last eight years, we’ve worked with the business community to reform the business tax system, and reduced the tax by an average of 11 percent.”

Casey Hernandez, a spokeswoman for Mayor Antonio Villaraigosa, said that efforts to make the city more business-friendly continue.

“From the Small Business Loan Program to the creation of a jobs team, the Mayor’s Office is providing resources, expediting services, and bridging the gap that sometimes exists between the public and private sectors,” Hernandez said.

Despite a current budget deficit of $100 million and no relief in sight, Hernandez said the Mayor’s Office is trying to find ways to cut taxes and otherwise help companies in emerging industries such as clean-tech, biotech, energy and the Internet.

But in the view of the 139 businesses surveyed in the city of Los Angeles, these moves have not made much of a dent in the city’s reputation of being unfriendly to business.

“The city makes it too costly to run a business!” one business respondent wrote anonymously. “There are too many hoops to jump through; too many costly fees and taxes.”

Economic development consultant Larry Kosmont said that despite the tax cuts, the city’s gross receipts tax remains the highest in Los Angeles County and one of the highest in the state.

Kosmont also said the survey shows that the city’s rhetoric about being more business-friendly doesn’t match the reality.

“This survey exposes the difference between the rhetoric of wanting to make things better and actually delivering on that commitment,” he said. “The perception is that the city hasn’t changed its basic attitude toward business. There’s still a belief that city staff doesn’t really care to cater to business.”

Presenting the findings of the survey to the Business Journal, Fleming said BizFed wants all proposed city ordinances and regulations to include a statement of economic impact. The statement would detail the effect of new rules on companies and employment.

Hernandez said the mayor would support that concept. Garcetti and Councilman Greig Smith proposed a motion calling for economic income statements.

The survey also found that about one in three county businesses anticipates cutting jobs next year. That may add to the county’s unemployment rate, which in September stood at a modern record of 12.7 percent; the survey projects double-digit unemployment will extend into 2011.

In the city of Los Angeles, the unemployment rate in September was nearly 14 percent.

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