L.A. in Dire Need of Some Hospitality

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A lot of attention and newsprint have been devoted recently to the topic of how the city of Los Angeles can become more business friendly. Mayor Antonio Villaraigosa has appointed Austin Beutner as first deputy mayor and chief executive for economic and business policy, with the charge to create jobs. The City Council has resurrected the Business Tax Advisory Committee, or BTAC, to research and recommend additional ways for the city to better serve its business sector. These are definitely moves in the right direction.

While Beutner and the BTAC are selecting the issues they wish to address, let me suggest just one step the city could take that would send a positive message to small businesses. There is a critical need to reform the process for renewing conditional use permits, or CUPs. A decade ago, the city revised its policy so that CUPs would not automatically renew when they expired. The assumption was that this would give the city more control to reign in operators of restaurants, clubs or entertainment venues that were out of compliance with their conditions. While this may have sounded good in theory, it has created a nightmare for the many businesses that are operating in compliance with their CUPs, and it has contributed to a logjam in the City Planning Department.

Let’s say you are a restaurant owner whose CUP is expiring. Under current city policy, you would have to start all over to get your renewal. You have no guarantee that the city is going to renew it. Add to that the possibility that it is going to take you at least 12 to 18 months to get through the renewal process, and that it is going to cost you around $35,000 to $40,000 by the time you pay all city fees and the cost of an expediter. How are you going to get financing for your business under such a circumstance? How can you make plans to improve or upgrade your operation or to hire more employees?

Let’s assume that you are a business that has always complied with your CUP and that has had no violations during the term of your CUP. Wouldn’t you wonder why you are being thrown into the same boat as a business that has had numerous infractions? Wouldn’t it make sense to reward a business that has been operating to the city’s expectations? Wouldn’t you wonder why you are doing business in the city of Los Angeles, when adjacent jurisdictions do not have this sunset provision?

Struggling to keep up

How much does a small business have to gross in order to net the fees to pay the cost of the CUP renewal? One of our local businesses estimated that a restaurant would need to gross more than $300,000 to net the $35,000 that would be needed. Is this a reasonable expectation for the city to place on a small business struggling to survive in this economy? We don’t believe so.

At the same time, the City Planning Department is struggling to stay up with the number of applications before it. Because of retirements and staff cutbacks, the number of zoning administrators could be down to three or four soon, about one-third of what the department formerly had. We understand that its monthly average number of cases is about 120. How will it be able to process this number of cases in a timely manner with the reduced staff? The answer is simply, “They won’t.” There will undoubtedly be lengthy delays, which will impose an additional burden on businesses.

There is a very logical solution to the CUP renewal issue, which would help both businesses and the city. That would be to provide a streamlined renewal process for businesses that have had no serious violations to their previous CUP. If a restaurant, club or entertainment venue gets a sign-off from its council person, Los Angeles Police Department and from the local neighborhood council that they have been good neighbors, why not short-circuit this lengthy and costly renewal process? This would reward those businesses that comply with their CUPs, and it would send a message to those who do not that they are going to have to pay the fees to reapply and undergo the lengthy renewal process.

This seems like a win-win proposition for everyone. It should be easy to implement – right? Wrong! To bring about this logical solution would require a change in the city code, and with the reductions in city personnel, we have been told that a code change can take up to two years to achieve, even if it isn’t controversial. Meanwhile, businesses are going to have to continue to pay the exorbitant costs associated with the renewal and the City Planning Department will be burdened with cases that it really should not have to process.

Extraordinary times call for extraordinary measures. With the city facing massive layoffs and looking for ways to continue providing basic services, the city must realize that it, too, is a business, and needs to operate more efficiently. We urge Beutner and the BTAC to take a look at this issue and to recommend quick action to adopt the needed changes. We shouldn’t have to wait two years or longer to fix what is a no-brainer. We urge the City Council to consider simple steps like this that can make the city more business friendly without compromising any safeguards to the public, and to determine how to implement such changes expeditiously. With the new leadership team, it should be possible to find a win-win solution for everyone.

Leron Gubler is president and chief executive of the Hollywood Chamber of Commerce.

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