JOHN DURAN 💰 Businesses, not City Hall, deserve credit for WeHo’s budget surplus

I have not attended or watched a City Council meeting in years. It has been so wonderful to have my privacy and Monday nights back. But after every Council meeting, I do get calls and texts from persons inside of City Hall and outside in the community that usually start with the phrase “you’re not gonna believe what they are doing now…”

When I was told that some members of the Council (the new inexperienced ones) were taking credit for the budget surplus being the result of their progressive policies, I scoffed. No. That really couldn’t be true. But here are the quotes verbatim:

Sepi Shyne: “…This is proof that when cities pass progressive policies, specifically in the area of workers’ rights and economic recovery, it makes the health of cities stronger…”

John Erickson: “…Good governance and good policies bring about a wonderful surplus…”

Chelsea Byers: “As a city, we have demonstrated that a bold, progressive approach to policymaking can both enrich the lives of our community members and create a world-class, globally recognized landscape fertile with opportunity…”

Oh, brother. Where to start?

This reminds me of the story of the rooster who would crow at dawn and then believe that he was responsible for making the sun rise. And now I have to tell the Council, “No. It’s not you. It’s us. Really.”

That world-class, globally recognized landscape fertile with opportunity is the result of the hard efforts, capital investment, and creation of a vibrant economy—BY THE BUSINESS COMMUNITY—not by City Hall.

You do not make anything. You do not create profits. You do not produce widgets or gaskets or the creative culture of the Sunset Strip, Santa Monica Blvd, or Melrose Avenue. It’s not you. It’s us. And by us, I mean the West Hollywood business community and residents.

WeHo culture and economy IS The Whiskey, The Rainbow, The Roxy, and The Viper Room. It is The Sunset Marquis, the Mondrian, The Pendry, and Rock n Roll Hyatt. WeHo culture and economy IS the Abbey, Mickey’s, Beaches, Heart, Hamburger Mary’s, the Formosa Café, La Boheme, Jones Café, Dan Tana’s, the Troubadour, and Laurel Hardware. WeHo Culture and economy IS the Pacific Design Center and every shop on the Avenues of Art and Design on Melrose along with our largest employer—Cedars Sinai.

None of this is you.

The vibrant economy that creates tax revenues is primarily driven by tourism dollars that show up in hotel taxes, restaurant and bar taxes, and our booming NIGHT life on the Strip and the Blvd. It is the entrepreneurs willing to take risks and bank loans and create capital to open a fledgling small business that one hopes will prosper and grow and be profitable.

So let’s be clear. THAT is the economic engine of West Hollywood: hotels, restaurants, bars, retail shops, and stores. NOT you. NOT City Hall.

You as City Hall regulate this economic activity and collect taxes to support the city’s infrastructure and services. You are not creating “profits”. You take a cut from the prosperity created by others. That is the truth. It’s REALLY not you.

Your policies have impeded, hampered, disabled, and destroyed many businesses across town. When COVID was ending and the businesses were deep in red ink debt having taken out government grants and loans to stay afloat—THAT was the moment you saddled businesses with the highest minimum wage in the nation and paid time off benefits for part-time workers—which forced many employers to lay off employees rather than hire new ones.

Those empty vacant storefronts. That is first and foremost—the property owners who want high and excessive rents for entrepreneurs to set up shop in WeHo. But it’s also you. How? Why would a new business owner choose to open a risky creative small business in WeHo when 1,000 feet away in neighboring Los Angeles or Beverly Hills—costs of labor and benefits are significantly lower?

So, if the cost of doing business in West Hollywood is significantly higher because of the highest minimum wage in the nation and highest level of benefits—who can afford to do that AND pay high rents? Well—high-end businesses can. And chain stores can. But do we really want to be a city with only high-end uses and chain stores? The Ma and Pa shops that give West Hollywood its unique character and flavor—will move East or South into Los Angeles—and still call themselves “West Hollywood” to take advantage of our brand—but not be saddled with the high cost of labor in this city.

Look at those budget surplus numbers more closely. Hotel TOT taxes are up. This means the hotels are filling up again post-COVID. Thank God. But you completely obliterated the goodwill that existed between the hotels and City Hall. I do not know even ONE general manager or hotel in the city that believes the City has their best interests at heart. In fact, they are eager to oust the incumbents who have caused them severe financial harm. For decades we had a wonderful and strong relationship between the Chamber of Commerce and City Hall. Poof. It’s all gone.

The other numbers that are up in the budget surplus are property taxes as former Councilmember Steve Martin noted in a Wehoville comment. Well, that’s because property values and the cost of housing in WeHo continue to climb sky-high and each time a property changes hands—it is reassessed by former WeHo Councilmember and now County Assessor Jeff Prang—which means the city gets higher property taxes each year. But do we really just want to be a city known as Beverly Hills adjacent with high housing costs? Yes. You can build affordable housing—but where will low and moderate-income people shop for their goods and services? Simple. In Los Angeles where it’s cheaper.

Please note—sales tax in the budget surplus is flat. It didn’t grow. That’s because the retail and service sector of our local economy is stagnant. THAT is precisely where your highest minimum wage and paid time off policies hit the hardest. And who pays the higher price for goods and services at these retail and service industry shops? No. Not City Hall. It is the consumers who make purchases—and that is US—the residents who rely on these small businesses for essential goods and services. WE are the ones who pay higher prices when we shop and make purchases. We are the ones who also carry the burden of your policies.

Your surpluses are mostly attributable to the very conservative forecasting methods used by the Finance Staff and City Manager David Wilson. I know because I watched them for 20 years. They would ALWAYS underestimate revenues and overestimate expenses to create VERY conservative expectations and forecasts. That continues today. If you want to thank people for the surplus in the city coffers—FIRST—thank the business community. SECOND—thank the residents for paying more in taxes each year. And THIRD—thank your city finance staff and manager for their solid conservative approach to city finances.

But it’s really not you that you should be praising.

Stop doing arithmetic. “Budget surplus is up therefore we are doing a good job and our policies are working.” No. Do calculus and complex thinking that recognizes the interwoven relationships between residents, businesses, and City Hall and then tell the truth about it. Yes, our surplus is up. Good thing we use conservative forecasts. But our storefronts are empty and vacant. We need to attract more small businesses to town. Oh. Our policies are impeding capital investment and risk-takers? What can we do to make West Hollywood a more attractive place to start a small business? How can we create new dynamic partnerships with our hotels and Chamber of Commerce? How do we repair the severe damage and destruction we created by taking the taxes paid by residents and transferring a share of that to workers who are not residents. (Sure. Some are. But if you think $20 an hour will get you a studio or one-bedroom apartment in WeHo—you are seriously deluded).

Look for the big picture. It’s not going to come from the 5 of you sitting on the dais. It’s gonna come from not only LISTENING to others—but voting and acting accordingly. Calculus. Not simple math.

You really are NOT responsible for the sun coming up over Santa Monica Boulevard………