Our small 1.9 square mile village became a city in 1984. Our neighbor to the west, Beverly Hills had all the glamour. Our neighbor to the east, Hollywood had all the fame. To the south was Melrose Ave, they were the trendsetters. In the middle of it all was a little unincorporated swab of LA County we call West Hollywood.
The Rock and Roll jetset would nest on Sunset Blvd and a sub-culture thrived along the world famous ‘Strip’. Gays would build a ghetto along Santa Monica with fashion stores lining the boulevard. The big money had yet to discover the pearls that rested just below the Hollywood Hills, the place we call home.
In years to come, the story of West Hollywood will be told. A small city that grew to become the epicenter of a thriving metropolis called Los Angeles. Or perhaps the history books will look back and wonder at point West Hollywood got swept into a homogenized version of LA?
The Covid-19 pandemic changed the way the world operated. Cities were abandoned for the suburbs. Over half a million California residents said goodbye to the Golden State. In WeHo, since 2019, there has been a net loss of 2500 voters and twice as many have ‘turned over’ with new residents occupying housing for those who fled to greener pastures. The rest of us die-hard Wehoans would stay and brave out the storm.
The culture of our community changed as businesses shuttered and friends moved on. The moratorium froze many others in place. My employees worked with masks and gloves to make it through the hardest of times and keep the Pride in WeHo waving in the darkest of hours.
Our local elections merged into the November ballot for the 2020 Presidential race. In that first citywide election a well organized UNITE HERE LOCAL 11 Union would elect two of its candidates. Lindsey Horvath had previously voted alongside pro-business Heilman and Duran and for the interests of WeHo’s unique service economy. Then Horvath switched teams to gain the UNITE HERE support for her County Supervisor race. Rapid-fire concessions were made to push through a hotel worker ordinance and then a new minimum wage ordinance. And then the worker ordinance that was designed for housekeepers was rolled out citywide.
The worker ordinance included a minimum wage component that is the highest in the nation and a vacation and sick leave component that is the most generous in the nation. And the council added a clause to increase the wage each year. On top of that, the previous city council had voted to raise the sales tax to the highest in the nation. The trifecta went into full implementation July 1st, 2023, and will change the type of businesses that can afford to operate in West Hollywood.
West Hollywood’s economy was already geared towards the tourist and ‘service economy’. But distributors and resellers of merchandise operated on a level playing field with neighboring cities to uphold the MSRP,manufacturers suggested retail price. Beverly Hills’ minimum wage is $15.50, Burbank is $15.50. Residents in those cities do not have to travel far to find a reasonable cleaner or coffeehouse.
It’s simple to understand. A $20 wage cost $30 to the employer with added taxes and insurance, etc. Sort of like when you purchase and pay sales tax for the total cost. The total cost of any employee is the wage plus the benefit package plus taxes and insurance.
The difference between the ordinance provisions and the statewide minimum wage cost a WeHo employer another $5 per hour, per employee. That is $5 per hour per employee more than a Beverly Hills employer. A staff of 6 in a business open 12 hours per day has a daily increase of $360, or over $10000 per month. It’s a second rent. The difference affects the competitiveness of every West Hollywood business. This is why you are getting surcharges on checks. And the businesses that cannot surcharge will slowly become extinct.
Most WeHo businesses have tipped employees who make well above the minimum wage, and a lot more tips than housekeepers per day. The employer is unfairly burdened to stay competitive. It’s a giant tax on shopping local.
Despite the empty storefronts, WeHo’s cash flow is booming. The hotel room rates are up over $100 per night since pre-Covid. Property taxes are rising and continue to grow with each new development. The sales tax, with the addition of cannabis revenues, offsets the loss of many small businesses.
The finances of the City of West Hollywood would remain strong thanks to the leadership of former City Manager Paul Arevalo and then Chief Risk Officer David Wilson. In March of 2020, the city sold just shy of 100 million dollars in lease revenue bonds at an interest rate below 3%. The proceeds allowed the City to reallocate previously earmarked capital reserves and keep the city on track during the pandemic. A copy of a news release is provided here: https://www.weho.org/Home/Components/News/News/9304/. Thank you David Wilson.
Today, West Hollywood has the finest hotels, the best restaurants, and some of the hottest trendsetting businesses. Our city budget will grow from just shy of $150 million to over $200 million in the next one or two fiscal cycles.
But the one-size-fits-all solution designed for housekeepers at hotels leaves many behind. The ordinance as applies to all workers within city bounds did not carve out exemptions for home-based businesses or smaller businesses. If you are in need of a caretaker it is going to cost you more money to grow old in WeHo. If you have a maid for more than a few hours a week you are responsible for their vacation time. How many people know that?
Affordability to residents was not seriously considered when moving wages, taxes, and benefits to the highest in the nation status. The cost to build an affordable housing unit is also higher in WeHo than anywhere else. All future costs will be higher for residents and businesses who choose to live and work in WeHo. And as leases begin to expire a changing commercial landscape will continue to evolve in WeHo.
What type of economy are we building? The closest thing I can think of is Las Vegas. Hotels, billboards, fancy restaurants, and politicians who are controlled by union bosses.
Hopefully, West Hollywood will be a beautiful epicenter of commerce and a beacon of hope for the world. But, for many, the dream of living in West Hollywood has been replaced with the dream of working in West Hollywood.
There is a huge thirst for revenue to keep the machines of WeHo lubricated. The city hall payroll and pensions are the most generous in the nation too. The future will offer many compromises to keep developers thriving and the union workers bustling at full throttle. It’s not a mom and pop town anymore.
With hotels and service sector businesses driving our economy, and ‘cannabis lounges’ and ‘private clubs’ open to attract the ‘high-rollers’, we can all look back at this point of inflection when West Hollywood changed forever.
The Billboards along the Sunset Strip look more like the Vegas strip each day. The Design District will soon resemble the Forum shops. The trendiest spots are right here in West Hollywood. Eat, Shop, Play and Stay WeHo. And bring your platinum card.
And who knows, Slot machines on the Sunset Strip? ..some may recall a proposal to bring gaming to the Sunset Strip. PropAA was defeated in 1990, and PropD was defeated in 1993.
Viva Las WeHo!
Larry I applaud your business ownership in the city for so many years, but just hire one less person. Almost Every business owner that I know in weho that can’t find enough workers, so they would be happy with a new candidate.
actually need to hire one more to cover the mandatory vacation times, or we close.
No you don’t, and no one can make you hire, you just need to adjust your current workers schedule. Be honest.
Political Opportunism has created a failed opportunity in West Hollywood.
Political opportunism has nothing to do with the fact that weho is in the middle of one if the highest concentration of wealth on the planet. That is what drives rents, the mix of businesses, but also the city’s ability to spend more in social welfare programs then any other city with less the 40,000 in CA.
It’s possible that you have s as n extremely biased point of view. The combination that you suggested is simply unrealistic. We don’t have balance in the community for sustainability.
The city spends a disproportionate amount on social programs, yet is cast as not doing enough. Do some research.
Thankfully there are some perceptive people speaking up.
Yes. People are getting fed up!
The ever-increasing city revenue base is the fertile ground on which opportunist politicians seeking a seat in congress or in the state senate can experiment with policy and spend public dollars like a drunken sailor on shore leave. The urban village has been lost to the abuse of offices of public trust. Public spending is driven by the pursuit of political endorsements and pandering to interests groups. It’s a sick system.
As always…TRUTH!
SPOT ON.
Very concise, Larry. Sad to me that a town built with the intentions of inclusion and affordability has evolved into the city governed by greed and political ambition, squeezing out those that built the town to a city. Weho once was a city to build a life in, to become your authentic self, now it’s a city for making a killing, moving on and leaving debris in wake.
… The city hall payroll and pensions are the most generous in the nation too….” And there is your problem, right there. A recent review of West Hollywood jobs and their corresponding salaries revealed that you can practically be a janitor at City Hall and make over six figures. The inflated salaries for what the positions actually do are absolutely ridiculous. The high sales tax is a burden on everyone. The excessively high minimum wage in comparison to Beverly Hills right next door is preposterous. People really forget that employers have a lot of payroll tax on top of whatever… Read more »
The entire deck needs to be cleared out along with their salaries.
Great article! Just like Vegas, West Hollywood knows how to clean dirty money while keeping up appearances. Only now, it’s all about putting a woke spin on organized corruption.