When Manhattan Bagel Co. Inc. recently decided to move out of North Hills and locate its new manufacturing facility in the city of San Fernando, it was more than just another company leaving Los Angeles city limits for more business-friendly climes.

After all, many other businesses that flee L.A. for neighboring municipalities go to places like Glendale, Vernon, Long Beach and Industry cities that have marketed their business acumen and actively courted companies in other cities.

But San Fernando? The tiny, Northeast San Fernando Valley city while having a competitive business tax structure is not exactly known for its marketing muscle.

“San Fernando definitely has not been a first-run competitor to L.A. It has been a sleeper,” said Larry Kosmont, president of Kosmont & Associates Inc., which produces an annual survey comparing the cost of doing business in Southern California cities.

But, Kosmont hastens to add, San Fernando is a sleeper that’s starting to awaken.

With its proximity to the city of Los Angeles and four major freeways and its own police and fire departments, both with quick 911 response times, San Fernando is the type of city businesses like, Kosmont said.

“It has all the conveniences of a big city with a small town atmosphere,” he said.

Manhattan Bagel is not the only company to see San Fernando’s advantages. Last year, home health care equipment supplier Apria Healthcare Inc. consolidated its regional offices in San Fernando. The San Diego-based company now has 125 employees at its San Fernando facility.

As for Manhattan Bagel, West Coast division General Manager Daniel Rush said logistical concerns prompted the company’s decision to move to San Fernando as much as the business-friendliness of the city.

Rush said Manhattan Bagel’s North Hills facility which it inherited after acquiring bagel chain I & Joy two years ago was much too small for the new factory, which is expected to produce 48,000 bagels an hour for Manhattan Bagel stores throughout California, Arizona, Nevada and the Southwest.

The ceilings in the former facility on Roscoe Boulevard in North Hills also were not tall enough for new equipment.

Those factors, Rush said, led Manhattan Bagel to search for a new manufacturing facility to make bagel dough and cheese spreads.

“We looked all over L.A. and Ventura counties and when I say, ‘all over,’ I mean ‘all over,'” Rush said.

In fact, Rush said, the company’s original preferences were nowhere near San Fernando either the City of Industry or another business-friendly city in the San Gabriel Valley.

But when real estate agents presented a short list of available facilities, the 21,500-square-foot building in the San Fernando Business Park stood out because it was the right size and just six miles from the North Hills facility meaning the 60 workers there would likely stay with the company after the move, Rush said.

“On top of that, when we went over there, the city of San Fernando was very easy to work with. They really wanted us there,” Rush said.

In fact, when Manhattan Bagel representatives met with San Fernando officials in January, they were also greeted by state officials ready to offer Manhattan Bagel incentives for moving there.

The California Trade and Commerce Agency, having been told by a Manhattan Bagel franchise developer that the company was interested in moving to San Fernando, had assembled a “Red Team” to meet with company representatives and encourage the move.

That team included representatives from the city of San Fernando, which offered help in obtaining permits; the Trade and Commerce Agency, which offered help in obtaining industrial revenue bonds; and Southern California Edison Corp., which offered lower fees to the company.

Janel Huff, business attraction specialist with the Trade and Commerce Agency, said Manhattan Bagel worked very quickly in finding a location.

For Rush, San Fernando’s business friendliness, while not the key factor, played a significant role in the company’s decision to move there.

San Fernando only charges manufacturers $5,332 in business taxes for the first $10 million in annual revenues, while L.A. charges $12,243. San Fernando also charges no utility users tax, while L.A. has a 12.5 percent electricity tax and a 10 percent tax for gas and telephone use.

“We wanted to be in a city that had a positive impact on us as far as taxes were concerned,” Rush said.

Saul Gomez, an assistant city administrator in San Fernando and the liaison to Manhattan Bagel, said that the company seemed impressed by the city’s business-friendly tax structure, particularly when company representatives asked for a break on their utility users tax.

“When we told them you can’t get a rebate because we

don’t have (a tax), I think that closed the deal,” he said.