Los Angeles is a particularly expensive place to do business, according to the annual Kosmont-Rose Institute Cost of Doing Business Survey. One reason is a convoluted gross receipts levy that taxes local companies on revenue they earn in the city of Los Angeles — and at a higher rate than they stand to pay in neighboring cities. Reducing the tax would significantly lower the costs of doing business in L.A. and encourage companies to expand and hire local workers.

Los Angeles received the highest possible cost ranking of “Very High Cost” or “$$$$$” and was ranked as one the twenty most expensive cities to do business in by the 2009 Kosmont Survey.

Of course, entrepreneurial Angelenos still find opportunities, but largely by working at home or in one of the city’s surrounding communities. They tend to flock to locales like Ontario, Burbank, Glendale or Culver City, all of which, according to the recent Kosmont-Rose Institute Cost of Doing Business Survey, are less expensive and easier to do business in than L.A.

This comes on the heels of four consecutive years of substantially more Californians moving to the other 49 states than moved into California. Two months ago a survey of 402 cities nationwide showed California cities have “very high cost ratings,” while Los Angeles County continued as one of the nation’s most expensive counties for doing business, according to the Kosmont-Rose Institute Cost of Doing Business survey.

Los Angeles could certainly use such a department. The most recent Kosmont-Rose Institute “Cost of Doing Business Survey” reported that Los Angeles remains the second-most-expensive city for businesses, behind Santa Monica, in the county and third most in the state, behind San Francisco and Santa Monica. Any hope of reform in terms of tax or regulatory relief, suggests Larry Kosmont, the report’s author, is unlikely because of the city’s fiscal crisis.

I am pleased to report that the 2008 Kosmont-Rose Institute Cost of Doing Business Survey is nearing completion. The Survey, in its fourteenth year of publication and its sixth year as a Rose Institute project, contains a vast amount of data about fees, taxes, costs, and incentives that affect business in 402 communities nationwide. Our team of freshman researchers under the leadership of Ritika Puri and I have been working hard on data collection and compilation for the last seven months to ensure a quality product:

New Methodologies
This year the Survey will feature new methodology in several places which promises to make it an even more accurate predictor of the relative cost of doing business. These changes were developed by research associate Murray Bessette over the past year. They include new weighting schemes for the criteria that determine the cost rating and a new way of compiling the resulting data.

Maps
This year we will continue to present information in a variety of formats. Other than the strictly quantitative information on the profiles and the comparative dollar sign ratings, we will utilize GIS mapping technology as well. The GIS maps allow the user to see with the glance of an eye how cities stack up next to one another.

Marketing
Lately we have been trying to market the Survey to potential buyers more actively than we have done in the past. We are aided by the broad array of individuals and organizations that might be interested in our authoritative account of comparative city cost. We have been in contact with the libraries at every major business school in the country. We have also begun efforts to contact property developers, journalists, and corporations. This attempt at active marketing of the Survey should yield increased publicity for the Survey and for the Institute.

As the new Manager of the Kosmont-Rose Cost of Doing Business Survey for the upcoming year, I hope to reshape the Survey to provide additional services to our users while maintaining the high standards of previous managers.

As summer approaches, we finalize spring semester projects and reflect upon another great year at the Rose Institute. We give a big thank you to our class of 2008 student managers, Pierce Rossum and Emily Pears, who have led us to the Rose Institute’s 35th year. Peter McGah, Ian Johnson, and I (the new managerial team) have big shoes to fill!

We also say goodbye and congratulations to Allison Strother, Meredith Stechbart, Ann Harvey, Dan Mitchell, Colin McDonell, and Josh Schneider. I speak on behalf of all Rose Institute students and staff in wishing them good luck and thanking them for an amazing four years – the Rose Institute will miss their leadership, talents, passions, and senses of humor.

This semester we conducted analyses of the plastics industry, business retention in the western states, and two GIS projects in population growth patterns and community self-segregation. We finished our year-long study for the Los Angeles County Economic Development Corporation (LAEDC), which surveyed L.A. County’s business community. We also continued our work with Dr. Ken Miller on his initiatives study for his upcoming publication. Our Kosmont team is excited to report a revised analytic framework, a new leadership team, and plans to launch a website. The Rose Institute has appointed Keith McCammon ’10 and Helen Pollock ’11 to spearhead the 2009 survey.

On April 24th, we celebrated the Rose Institute’s 35th Anniversary in Sacramento with a luncheon that included the presentation of the inaugural “Rose Institute Award for Excellence in Public Service.” Following the luncheon the Institute’s Board of Governors held their bi-annual meeting that showcased short presentations by selected Rose Institute students. Eight Rose students and eleven members of Dr. Miller’s California Politics class traveled to Sacramento for this momentous occasion.

This summer, the Rose Institute will launch its new internship program with the Voice of San Diego, a nonprofit online newspaper that investigates economics, politics, and quality of life. Thanks to a generous donation from Honorary Board Member Buzz Woolley’59, the Institute has created four Girard Fellowships to assist the Voice with research. Duties may include writing for and creating a Wiki database for the newspaper. Voice of San Diego has also expressed interest in conducting research on affordable housing in San Diego through the program. We hope to create a lasting partnership with Voice of San Diego and to develop additional projects for the 2008-2009 school year.

As usual, the Rose Institute expects additional projects including economic impact studies, fiscal analyses, GIS and redistricting projects and quality of life surveys. Ian, Peter, and I are excited to manage upcoming projects – our first being an Institute-wide trip to Disneyland. We thank our eight graduating seniors for their accomplishments, insight, and hard work, and we wish them luck in all future endeavors.

Last summer, Ritika Puri, a 21-year-old junior and literature major at Claremont McKenna, wanted an internship related to social and economic development in India. She was particularly interested in exploring the relationship between socioeconomic status and access to education and health-care facilities. Rather than look for an established internship, “I was really interested in designing my own,” says Ms. Puri.

Ms. Puri contacted Adharshila, an organization in New Delhi that assists about 400 residents in a local slum, through a family friend. She was hired to assess Adharshila’s existing programs and help choose new initiatives for the organization. She went door-to-door to ask residents what services they needed the most. People said they wanted better access to health care and better tutoring services for children, she says. She obtained a $500 donation, which she used to buy school supplies for 100 children. She also helped start a health center, which receives about 20 patients a day. “My role just sort of grew while on the job,” she says.

See Ritika’s previous post on the Kosmont-Rose Cost of Doing Business Survey she managed.

Factor in traffic congestion and the lack of parking, as well as business taxes — which are some of the highest in Los Angeles County — and it becomes clear that small businesses face an uphill struggle to remain open. Last year Santa Monica was named the costliest city to do business in the county by the Kosmont-Rose Institute, a Los-Angeles-based economic development firm.

The firm looked at more than 400 cities in California and across the nation and examined factors like business tax rates, utility taxes, sales tax, property taxes and state corporate income taxes. Santa Monica’s cost of doing business has continued to escalate, thanks in part to one of the higher utility tax rates in the county at 10 percent.

Also, over the years, various sectors of the city’s business community have been targeted for mandates and regulations, including an ultimately futile attempt six years ago to impose a coastal zone living wage — aimed at the big beachfront hotels — and increased regulations on auto-related businesses.

“The city has done everything they can to make it difficult for small businesses,” said Mike Howell, owner of Santa Monica Lock & Safe Co., which has been a fixture in the Pico Neighborhood since 1967. “By making us take some of our signage down, it’s hard for a store like mine [that is setback from the street] to be seen by people driving by. Streets have been made narrower, creating more traffic and parking is a mess … They are just not business friendly.

Recent business surveys by Kosmont & Associates, a private consulting group, and the Rose Institute at Claremont McKenna College rank the city as the second most expensive in which to do business in California.Larry Kosmont, co-author of the Kosmont-Rose Institute report, says business costs in L.A. average between 2 1/2 to five times those of more business-friendly cities.

For instance, a $10-million office or retail operation pays about $59,000 in annual utility taxes and license fees to do business in L.A., compared with $9,300 in Pasadena, $904 in Burbank and zero in Rosemead.