Last week in WEHOville there was an article regarding Councilman Heilman’s proposal to help revive economic development in West Hollywood. While Councilman John Heilman’s efforts to retain existing and attract new businesses to our city are commendable, the obstacles for businesses in our city go beyond the disruptions caused by the pandemic. The major factors impacting economic development in WeHo are labor costs and the exorbitantly priced commercial real estate market.
The first task of the Economic Development Department should be to revisit the current minimum wage structure. Having the highest minimum wage in the nation has had a chilling effect on the profitability of existing businesses, making it difficult for them to remain in West Hollywood. It also acts as a disincentive to companies looking to relocate to or open a location in our city.
Additionally, any business paying its employees $19 an hour caters to tourists or wealthy individuals. There’s nothing wrong with having those businesses in our community, except when it starts to hurt the quality of life of our citizens when the small businesses proving the essential services which make a community livable, close. While people deserve to earn a decent hourly wage, there must be a balance.
Creating a tiered minimum wage structure that aligns with a business’s revenue stream can have multiple benefits. Firstly, it can help existing businesses stay in the city by reducing operating costs. Secondly, it can make it easier for new businesses to start-up in the city. It can be used as an incentive to attract companies or services currently lacking in the city.
The second hurdle for business is the high cost of rent. The number of vacant stores along our streets grows each month. The general rule of thumb for property owners is, “If you are full, your rent is too low.” Commercial property owners raise rents to levels which drive small, existing businesses out, then let a property sit vacant until a tenant comes along willing to pay what they’re asking. The city loses sales tax revenue, residents lose access to essential businesses, and our community looks blighted.
Implementing a progressive vacancy tax which makes it more expensive for the property owner each month a storefront sits vacant, would encourage property owners to keep their properties leased. Also worth consideration is creating small business rent control, which would establish guidelines and set maximums for lease renewal increases. Property owners deserve a reasonable return on investment, just as much as business owners deserve to pay fair rents.
While the city and region are still suffering from the “hangover” effects of the pandemic, a failure to remove the root cause of the problems facing businesses, any efforts to turn things around are sure to fail.
Jonathan H. Dowling,
West Hollywood
Send your Dear WeHo letters to brandon@wehoville.com.
One further note to Mr. Dowling’s analysis. West Hollywood is a 1.9 sq mile “donut hole” surrounded by LA and Beverly Hills who do not have the same high minimum wage and PTO requirements. Our businesses cannot remain competitive with businesses, some just a few hundred feet away, that face such a significant difference in labor costs. And for multi-unit operators and franchise operations forced to establish payroll policies and programs specifically for West Hollywood that put their cost of operations and margins out of synch with the rest of their stores it becomes difficult, if not impossible, to justify… Read more »
Vacancy tax is such a backwards idea. Landlords are in the business of renting space, not leaving it empty. The risk/reward ratio to renting has changed dramatically due to policies where evictions (if possible at all) take 6+ months. We all pay higher rents to subsidize those losses forced onto landlords by poor legislation, court backlogs, COVID policies. Vacancy tax will likely depress rents for new leases but will be factored into lease renewals for existing tenants, causing overall rent growth as opposed to the intended goal of helping tenants.
DREAM …One day, as many as possible, the people that live and rent in Weho all walk to Santa Monica Blvd at the same time ( I mean everyone ) and show The CITY AND SHERIFF we are here ….otherwise they just do not care about you or your presence. I know many might not believe that but $$ will always speak louder in Politics and sadly the Sheriffs hands are tied by many factors.. Left Right Center we are all neighbors first. I dont have to like you and you dont have to like me or have the same… Read more »
Part of why we are here are the progressives that took over City Hall with deceit, ignorant of cause and effect.
City counsel members should live here at least 5 years before being allowed to run for office.
I’m glad someone is saying this! A minimum wage should be whatever a business owner thinks the job is worth and no entity has any right to make the decision what an employer must pay employees. The beauty of capitalism is that the market disciplines itself. If a competitor pays their workers more, then other businesses will have to keep up. Government interference in businesses distorts the process of the free market which would end up being the best for everyone, including the minimum wage worker. No one should expect to live alone long-term on a minimum wage. These are… Read more »
I think society has evolved since child labor, no minimum wage, and no OSHA regulations. Check your privilege.
I’m not advocating for no regulations but the concept of competition takes care of almost all the issues in a free market. When government gets involved the purity of the free market becomes distorted, and when a business fails it usually can be traced back to onerous regulations made by people who have never run a business. The market disciplines itself through competition! It’s pretty much as simple as that.
As long as silly people are on the city council……..the lunacity drives on.
Most WH resident are regular working professionals who live here because it’s centrally located……not because of the creepy and marxist agenda of the city.
There are no silly people on the city council. Only silly comments like yours.
You fool, don’t be so silly!
Says a very silly person.
Agreed, greeneyedguy.
Don’t forget the huge sales tax that we have here in West Hollywood. AND also the cut to the sheriffs department that had sent out the word that our “leaders” were soft on crime…during a surge in the crime rate. DUMB moves all around.
Mr. Dowling,
Bravo! 🎯🎯🎯.
Thank you very much for your concise and perfectly stated analysis. That you also provided perfectly plausible solutions is 🎯🎯🎯.
Thank you again.
Listen up Weho City Council; read and learn.
You are better off living in socialist country.
It seems like there is a bit of double standard going on here at WeHoville.
Commerical rents are too damn high. But rent control for residential properties is a really bad policy. Whatever trends we are seeing in West Hollywood are trends seen across the country. Indeed things way worse in San Francisco. There are a myriad of reasons for the challenges of being in business today. While West Hollywood is being impacted by problems that are perhaps self inflicted and some outside of our control, the sky is not falling on the WeHo economy.
There is no double standard by sharing various views as submitted by residents. If you want to say all commercial rents are too damn high, that kind of statement is not rooted in reality or experience. Rents are anywhere from 7.50 to 12 per foot, they are predictable, (you know what you get when you sign the lease) and long term. In fact, in many cases, a tenant with a long term lease can tie up the property at below market rents.
Larry, don’t be so defensive. I am only re-stating the headline.
I have been in more than a few long term leases during my forty year career. I was blessed with rational commercial landlords who wanted to keep their building full.
Stevie, just relaying,..there is no standard..so not a double standard. Rent for office space is not what his letter was referring too. But, stay tuned, my ‘dont blame the landlord’ op ed is in work!
Don’t let the voters know your not for rent control. The freeloaders want to hear Marxist stuff like all 5 nutcase current people on the Council spew out. Pssst, let them know you want rent set at 1975 fair market levels. You’re welcome.
Small business rent control? You need to move to north Korea. Prices are super stable there. John Heilman has had almost 40 years in office, yet he’s got a new plan? You voters, and the lazy non voters deserve what you get.
I hope using store fronts as glorified billboards is also subject to any planned vacancy tax. Taking up ground floor retail space for mistr signs also contributes to neighborhood decline when these could be active spaces drawing foot traffic, I’m surprised this doesn’t violating any existing planning codes.