Thursday, January 22, 2015

The Cost of Doing Business in Torrance

Without pressing individuals to share their names publicly, for fear that they would suffer retaliation from city leaders, I am sharing with as many readers as are willing to open their eyes about the detrimental influence of government policies on business creation and economic growth.

One business leaders shared with stories of great frustration from local entrepreneurs, including the unending run-around he and his colleagues had to endure to get the necessary clearances and building permits to open up an office.

Another business owner wanted to open up a one-on-one business facility, yet would have to pay $4000 for a conditional use permit. With a fee like that, such an enterprise was dead before taking off.

Torrance, CA beach area
A notary public was facing the prospect of paying $200 for a business license.

Yes, businesses have to pay for a license to open  in the city of Torrance. Most individual consumers have no idea about the costs which businesses have to shoulder just to get going.

Another Torrance business owner related that the cost of the property for his business was so high, he had to move to a nearby city in the South Bay, where he would pay less for rent. After all the costs for his employees, overhead, and resources, though, he had a very small profit margin.

Local business owners have also shared with me that the city does not permit them to have signs on the sidewalk to invite more business. Some owners have to hire sign carriers to throw banners around or twirl them in the air. The city cannot stop them from doing that, because it's an exercise of free speech, protected by the First Amendment.

I had never taken into account that with all the businesses operating in the city of Torrance, and throughout the South Bay, that they are not necessarily turning a huge profit, or maintaining a strong profit margin (the latter is the pure profit remaining to the entrepreneur after paying for all costs associated with the business).

One lady, who owned a restaurant in South Torrance, was so fed up with all the costs: "The cook was making more money than me!" With all the fees and operating costs associated with the industry, she gave it up.

Another business owner complained about the Torrance Department of Economic Development, recently created by former Mayor Frank Scotto during his tenure in City Hall. A number of complaints about the former mayor have included their frustration with alleged hard-ball tactics dealing with opponents. Other allegations have raised concerns that he angled for certain people to stay on Torrance City Council so that they would award him the towing contract in the near future.

Putting those allegations aside, one has to ask: why does the City of Torrance need a Department of Economic Development in the first place?

Official seal of Torrance, California
And the taxes for running a business in the city. . .

A base fee of $161.00, adding $49 for each employee added to work there. Is this too much? Why are these taxes just on the number of people working in a business?

According to one report, the Torrance Department of Economic Development has two employees, each making roughly $100,000, yet a number of prospective business owners face hardships getting their permits done, or getting the required information to open or expand their operations.

As for the Torrance Chamber of Commerce, one business owner complained that they did nothing to help in their conflicts with the City of Torrance.

Another business, an auto shop, ultimately closed up and moved to Texas in part because they received no support from the City Council on certain issues. The details were not forthcoming about the matter, however.

These reports are preliminary, information which I have received from individuals operating in the city, who complain about the difficulties they face to innovate or expand, including the parking restrictions placed on their sites should they invite more business, and thus more traffic.

Torrance CA, Wilson Park (Edilyn Tsai)

Torrance is supposed to be a business-friendly city, one which balances residential with industrial and commercial investment. Yet from the concerns I have heard (so far) from local business owners, and those which have given up or moved their businesses out of the city, they are not finding the business-friendly rapport they were hoping for.


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