Business Audits – Fullerton, CA

Several downtown issues were decided at the September 18 council meeting.

The city introduced the power to audit any business in a first reading of a new ordinance The city council intends to enact a tool to help recoup some tax money from the extravagantly costly Restaurant Overlay District, otherwise known as downtown Fullerton.

The Downtown Working Group, which reported to the council May 15, 2007, that the city was spending for police, fire and maintenance services $965,000 more than its income from the downtown, had also discovered that in a sampling of 15 businesses, about $10,000,000 was misstated in their annual business registration renewals. The loss to the city in business tax amounts to $507. However, a business tax audit, if a deficiency is found, can result in penalties up to 100% of the tax, yielding $3,045 instead of the $507. The audited business would also be assessed for the cost of the audit from $500 to $1,500 whether or not a deficiency is discovered.

Another potential source of income from the downtown is a BID (Business Improvement District) raised again by Redevelopment Director Rob Zur Schmiede, as he did May 15. Councilmember Quirk asked that the BID be put on a council agenda saying, “Who are the leaders? It is the responsibility of the business owners to pay for downtown maintenance.”

The city cannot establish a BID, but staff apparently will seek out a business leader to start one. Once a BID is voted in, each and
every business will be taxed for “improving” the district. (What about creating a BID based on amount of alcohol sold, since problems are alcohol-related. Many downtown businesss are already paying for broken windows, graffiti removal, and other clean-up created by out-of-control bar patrons. Shouldn’t the businesses that cater to those patrons pay the price of cleaning up after them?)

“We can’t lead or be in front of it,” said Zur Schmiede. “We can help pay for planning, and two or three consultants.” He noted the report of the arts group headed by Susan Petrella, that the money brought into the city by the arts is significant. Her group, he said, “might serve as a vehicle for something like this.”