Having read former Beverly Hills City Manager Rod Wood’s commentary in the Sept. 13 issue of the Business Journal (“A Healthy Prescription?”), it appears to us that Wood has either developed severe amnesia since his retirement or he never read some of the extensive (and expensive) studies that he authorized during his tenure.
His statements about medical office buildings and the long-term economic health of the city of Beverly Hills are in stark contrast to the city’s and the Beverly Hills Conference & Visitors Bureau’s own studies, along with a study that we commissioned earlier this year, and what we see every day owning and operating medical office buildings throughout the city..
In 2006, Wood commissioned MBIA MuniServices, a respected firm that provides financial modeling and other services for municipalities, to research and create a report titled “Beverly Hills Economic Profile: Sharpening the Competitive Edge.” This 74-page report was based upon a review of the city’s tax collections, several publicly available indexes and a telephone survey of businesses. Interestingly, the telephone survey portion was weighted against medical offices because it was structured (according to the survey methods published on page 72 of the report) to give greater weight to businesses with higher business license taxes. Medical offices in Beverly Hills, like law offices, are taxed based upon the number of employees in the office rather than gross receipts.
However, despite this calculated bias against medical office space, the MBIA report showed that “Health Services” (no definition given) provided 9 percent of the city’s business tax revenue, for a total of $2.57 million. The only category of businesses in the city that exceeded that was commercial building operations, which provided 33 percent for a total of $9.01 million. Under this city-sponsored report, Health Services was found to generate 14-times higher tax revenue than motion picture production and 30-times more tax revenue than talent agencies, both of which Wood cites in his op-ed piece as “major sources of revenue for the city.”
Wood wrote that medical offices pay higher rents than other businesses in the city. What he did not mention while discussing Beverly Hills’ “archaic” tax structure is that the taxes paid on commercial office rents are substantially higher in Beverly Hills than in the city of Los Angeles and other neighboring cities. Similarly sized buildings in Beverly Hills and Los Angeles have a disparity that is overwhelming.
Wood made numerous other statements that are in stark contrast to the MBIA report – but let’s turn to another report.
For reprint and licensing requests for this article, CLICK HERE.