Vernon’s ‘Business Friendly’ Title Questioned
By Nancy Martinez, EGP Staff Writer
In 1997 when Princess Paper, Inc. President Abraham Hakimi started his business, he decided to locate it in Vernon because the city was “very advantageous” and “easy to work with.” But that may no longer be the case, Hakimi told the council Tuesday.
He said his positive view of Vernon was shattered when he opened his latest bill from the city and was faced with substantially higher fees for city services. He said it made him question whether Vernon is still “business-friendly.”
“Today I’m sure it’s not and a lot of the other business owners feel the same way,” Hakimi said during public comment.
“We [businesses] fought and stood by the city to stop the [disincorporation] but now looking back I think maybe that was a mistake.”
Faced with the possibility of disincorporation and fearing such action would raise their cost of doing business and result in greater restrictions, many Vernon businesses actively supported the city’s effort to fend off the effort, testifying at hearings and lobbying elected officials on the city’s behalf.
At Tuesday’s city council meeting, Vernon’s Independent Reform Monitor, former California attorney general John Van De Kamp advised the council to “make sure that its principal economic attraction remains intact” as the city continues to move forward with reforms and to overcome deep financial woes. He was referring to local businesses.
A scheduled five percent electric rate hike, increase in the warehouse parcel tax and a couple of increases to the general fee schedule allowed the city to balance the budget for the 2014-2015 fiscal year.
But Peter Corselli, vice president of U.S. Growers Cold Storage believes that budget was balanced on the “backs of the business community.”
“If you keep on passing [the burden] on to businesses, more and more are going to leave,” he said.
He told EGP the city “likes to think they are business friendly,” but in his experience the cost of doing business in Vernon is no longer competitive.
Likewise, Hakimi accuses the city of “nickel and diming” businesses, which he finds unacceptable.
“If the city wants to have businesses leave or prevent new businesses from coming, all you have to do is ask,” he sarcastically told the council Tuesday.
During his presentation Tuesday, Van De Kamp noted that increases to business costs are a result of “belt tightening” by the city, after years of undercharging businesses for service they use.
He responded to Hakimi’s concern over the increased costs for fire inspections, which in the past was absorbed by the city and not passed on to the individual businesses being inspected.
“Now we are trying to tax individuals who are using the city service rather than spreading it throughout the city,” Van De Kamp explained.
Nevertheless, “What [Mr. Hakimi] expressed is something you don’t want to hear,” Van De Kamp told the council. “That is, that businesses are upset with what you are doing.”
To avoid business owners feeling Vernon is no longer affordable, Van de Kamp suggested the city put its numbers to the test.
“You need to prove that you are working to make a city that is very welcoming to the business community,” he said. Compare Vernon’s taxes, fees and utility rates to the competition, Van De Kamp proposed. If the fees are not lower, “makes sure they are,” he said.
Eric Gustafson, CEO of Coast Packing Company and chairman of the Vernon Chamber of Commerce, told EGP that Vernon has had its challenges and the business community is feeling them.
He said the recent price increases, specifically in utilities rates over the past 24 months, is a concern to local businesses.
Gustafson said he would like the city to look for alternatives to balance the budget.
Van De Kamp suggested that the city look at lowering its annual debt cost, which stands at $46 million per year on the city’s $322 million electricity system bond.
If possible, he recommends the city use the difference to finance some tax relief to business.
Van De Kamp’s latest report on the city’s progress places the city’s vacancy rate at 4.2 percent as of July 1; the same rate reported in 2012 and 2013.
Vernon’s vacancy rate is slightly higher than nearby industrial cities. Commerce has a vacancy rate of 3.9 percent while the City of Industry has a 3.7 percent vacancy and Santa Fe Springs’s rate stands at 2.9 percent.
“Vernon was designed to be a business-friendly city and they are struggling, but so is every other cities who are trying to fulfill its mission of attracting new businesses,” said Stan Stosel, senior assistant business manager at International Brotherhood of Electric Workers local 47, which represents labor groups in Vernon.
Stosel told EGP he believes the vacancy rates have remained the same because of the economy.
“Businesses didn’t flee Vernon,” he pointed out. “It shows the optimism and hope, and it has worked out well for the businesses that have stayed,” Stosel said.
Van De Kamp said the city could attract more business if they can prove their taxes and utility rates are lower.
Corselli told EGP he thinks that’s going to be hard to do, especially when he compares his utility costs to those of his brother who owns a similar company in the city of Los Angeles.
The city’s recently established business development committee —which will be made up of three business owners, two individuals with knowledge of Vernon’s real estate market, a union representative or employee and a councilmember — may provide a new place where business concerns can be addressed.
“We have to continue open dialogue with business, especially as we deal with these changes,” said Councilman Richard Maisano about the committee’s mission, which is to make the city more attractive to employees, businesses and investors while still taking into consideration the concerns of residents and the communities surrounding Vernon.
“Businesses have a big stake in how the government behaves,” said Van De Kamp in his report.
Councilman Michael Ybarra said his priority for the next six months will be the city’s finances, specifically looking at ways to use the budget surplus to help the businesses.
For “the last several years they have taken the brunt, no doubt about it,” he said. “As the dust starts settling … the fees need to be tweaked.”
Ybarra pointed out that Vernon, with a residential population of 120 is not like other cities that can rely on other types of revenue. He said he understands businesses were used to a certain cost of business, and he is committed to looking at giving back to the business community as the “load comes down.”
“The city needs to move in both directions, not only to take care of roads and infrastructure improvements, but also to let the business community know that we care about them,” said Van De Kamp.Print This Post
August 21, 2014 Copyright © 2012 Eastern Group Publications, Inc.