Economic Growth: Borrowing from our Neighbors

An editorial by Tim Hodge…

There has been much written about the loss of important major employers and other businesses in Simi Valley.  When it comes to economic vitality, there is no doubt that the tide is ebbing rather than coming in.

There has been nearly as much written about the efforts of City Government to keep and/or attract new business.  Some of that focus has been about providing large cash incentives for business to come to the city.  Throwing money at businesses like Nordstrom is not the answer and the City Council was wise not to pay that tribute.  This is not because a Nordstom wouldn’t have been a fantastic addition, but because giving tax dollars away like some Central Committee is not what we are supposed to be doing in a market driven economy.

Instead, maybe the better approach is to evaluate what we shouldn’t be doing.  Seeing what other cities aren’t doing, and in not doing are encouraging economic growth, doesn’t require a long walk.

The City of Santa Clarita is known as the most business friendly city in Los Angeles County.  The growth they have experienced is not based on tossing out the building code or allowing any ugly building to go up.  Instead, it is based on what they don’t do plus what they do better.

A quick look at the City of Santa Clarita website reveals the following about their business taxes:

1)  NO Business License Fee;
2)  NO Utility Users Tax;
3)  NO Gross Receipts Tax

In addition, Santa Clarita has Enterprise Zones that provide further State Tax incentives and provides for a Use Tax program for state tax payments that results further tax incentives to the business.

That City provides a financial incentive of 5-10% for local vendors making it more likely the City can do their own shopping locally and support jobs and services.  They have a One Stop permitting program, an Expedited Permitting process for commercial and industrial users of less than 3,000 square feet, a published guide for opening a small business and a published 21 point plan for business growth.

Looking at the Simi Valley website, we show a Facade Renovation Program on Los Angeles Street and also on Tapo Street.  In addition, the “Business Incentive” page discusses demographics of our citizens and the Shop Simi Valley First program.

Simi Valley charges for business licenses and we do have a gross receipts tax.  At just $37.50 per $100,000 in gross revenues, it doesn’t sound like much.  But, most larger businesses are pleased with a post-tax performance of 3%.  If a business could save $37.50 per $100k in sales, and figure out a way to do that every other week, that business would improve their annual bottom line by 34%.

For business, it is about doing the right thing as often as possible to keep costs down and compete.  Yes, even the gross receipts tax is a point of consideration when a business considers Simi Valley.

Certainly reducing or eliminating these costs will impact total revenues, at least in the short term.  We are all hoping the economy rebounds, and when it does, will Simi Valley be the city of choice for expansion?  Will we be on the forefront of cities doing the right thing to make the permitting process effective and certain?  Will we invest not by giving money away, but by reducing the tax burden on every business in Simi Valley…the new and the existing?

Maybe not all of these programs will work for Simi Valley.  A deeper examination of how they are working for Santa Clarita would be in order.  We do know there are a great many cities calling for the attention of prospective employers, retail shopping and restaurant opportunities.  No City Council should not be choosing winners and losers in the tax game.  That leads to many of the ills that have plagued governments for at least the last century.

Those of us that know Simi Valley know what a fantastic place it is to live.  Keeping it that way requires balance in all areas, including economic strength.  Being good at what we have to do with respect to planning and permitting, and by reducing taxes that other cities would charge, would give Simi Valley a still better chance to compete and thrive.

11 thoughts on “Economic Growth: Borrowing from our Neighbors

  1. Tim,

    I like the research you have done here. I think Simi Valley has been nickel and diming businesses here for some time. Additionally, getting permits is an atrocious process! You’re mention of Nordstrom’s and throwing money at companies like it is another major problem. Simi demographics don’t support stores like Nordstroms, and trying to make Simi Valley into something it isn’t is the problem our City leadership has to wrap their heads around. We could have supported the IKEA that the SFV is getting. We didn’t. One must ask why the City of Los Angeles, the armpit of So. Cal is more business friendly than Simi Valley. The Super Target is gonna put “center city Target” out of business, and will affect the surrounding grocers that have been there for years. Simi Target West, aka Moorpark Target is just too close, and we can’t support three of these stores. We are a small town of fast food joints and small businesses. What sort of thought and planning went into building an all outdoor mall in a city whose Chumash name translates to the City of the wind? No shelter from the wind and rain equates to no shoppers during those times / months. Ask some of those business owners who had to shut down. The current group has put us here and it is time for new leadership to take the issues by the horn. They haven’t properly staffed the Police Department and we are now a city of property crime that is out of control. Of course the cops can’t stop it, there are only 103 of them who can police the city. The rest are managers who aren’t cops anymore. Mike Sedell likes to play word games and tell everyone the cops are fully staffed. Ask any cop at a starbucks or other coffee house and they will tell you the truth. I have had these conversations and that is why I can comment. Everything great about living in Simi comes down to public safety. If it is a safe community, people will move here, start businesses here, raise their families here and thrive here. As it stands, number 31 on the safe city list, we are doomed for worse, cause Sedell and the Council keep doctoring the statistics to tell us all we are safer now than we were 20 years ago. I call BS!

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  2. Just some background: In 1981 the City’s Fiscal Projection Advisory Committee, “often called the Huber Committee after Councilman Bob Huber, who came up with the idea” according to The Enterprise newspaper (4-12-81), recommended increasing the City’s business tax, and instituting that business tax for professionals, real estate brokers and agents. The City Council earlier that year unanimously voted to create the business tax, and soon thereafter began the process of increasing it and applying it to the other areas you see today such as to real estate agents.

    (The current City Council in recent years figured out that those who were both real estate brokers and agents were being double-taxed and fixed that problem. Perhaps the next focus should be all the other taxes instituted by the Huber Committee).

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  3. Pingback: August 17, 2010 – Daily Brief | SCVTalk.com

  4. Ted:

    You’ve laid out a very lucid case for Simi Valley’s problems as it relates to attractiveness vs. surrounding communities, both for business and potential residents.

    As it relates to Santa Clarita, one nuance that many miss (even some in town) is despite SCV being constrained by the Newhall Pass, it offers an extremely progressive commuter transit system connecting residents to jobs via bus and rail. The lone metrolink route to/from Simi is extremely limiting, and residents (like myself) often pine for commute options outside the traditional automobile.

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  5. Ted, for someone who makes their living in Simi Valley, as does your family, you sure are negative. Isn’t there anything good you like about Simi Valley? Is it all bad? To listen to you talk, this should be the last place anyone would want to buy a home. Yeez,

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  6. How about observing some good things, just once in a while….
    ….. “Should we talk about the time I was chased out of the building department after I picked up an approved set of plans and the building inspector threatened me? He made a vendetta against the business that was opening and he was waiting to go after them once they opened”.
    …well Ted I am curious, did you do anything about this alleged threat? And why did they make the threat in the first place. Seems you’re an angry person so perhaps you provoked them? Not a reason for their behavior, but maybe in another life the city employee worked for JetBlue?
    Approving more housing developments in our community depends on the development and what it brings to the community. Each must stand on its own.

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  7. Sorry I missed this.

    I spend all day extolling the virtues of this city to those moving here. There are plenty of great things about Simi Valley.

    We have a problem down at the city related to businesses and it needs to be fixed.

    So far the incumbents want to talk about the trees on LA Ave and fundraisers. How about the issues that will have a bigger impact on the future of this city?

    There is another huge waste of time coming down the pipe that should hit the planning commission in the next month or two. No Architectural changes to the building, no occupancy changes, no needed parking. Staff should have approved this thing, but the typical City of Simi approval rotisserie has delayed this business 18 months.

    And no Barbra, I did not provoke the B&S employee. The reason why you keep your mouth shut in these situations is that they will turn your project into a life long affair if you complain.

    The point is that the “tour guide” or what ever this extra layer of government is supposed to be will not help these situations.

    Someone ought to roll up their sleeves and have a pep talk with the department heads and remind then that many of these businesses are generating the tax dollars that pay their salaries. They should be helping these people get through the process.

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  8. Barbra, the question you should ask is not what Ted did to make the Building Inspector mad at him. You should ask why any of our government employees would have vendettas against certain business people? These employees should be hopping around with joy to have something to take care of for our businesses and they should be doing it swiftly! Barbra, your willingness to insinuate that Ted or others “insulted” our government officials in some way demonstrates and displays the ineptness, insecurity and lack of care of your leadership as a councillady. I’ve reviewed the YOUTUBE video the you made in 2008 with your kids standing on the corner… you stated that YOU had a lock on your seat due to your incumbency and NO COULD BEAT YOU! Interesting, Barbra, again a telling sign of why you would “take” umbridge so much when questioned by us “lowly citizens.” Maybe you should look more introspectively and stop all the rabblerousing rants you make whenever “your stewardship” is questioned. Besides your commitment to cutting down our residents cherished trees, what have you really done for this city, not much! Less you want to count helping expose the Gerson family as a bunch of bribing criminals when you accepted a much too large campaign contribution from Papa Gerson’s three checking accounts! Barbra it is time to you to retire yourself to the dustbin of political history and step aside!

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