Hermosa voters will decide in November whether to impose steep increases in the business license tax for nightspots that serve liquor, stay open late and are clustered near similar establishments.
Hermosa Beach officials have verified that activist Jim Lissner has received more than the required number of signatures on petitions to place the initiative before Hermosa voters. In California, such taxes may be raised only by a vote of the people.
To complicate matters, the November ballot could include a second, competing measure that also would raise the taxes for some city business licenses, but not so steeply and not just on nightspots.
A city-appointed committee has been studying the business license taxes, which have not been raised in Hermosa for 19 years. The committee, which includes businesspeople and two Hermosa Beach City Council members, might propose a ballot measure to the council in June. At that point, it would take a four-fifths majority of the council to place a tax-raising measure on the ballot.
Officials were continuing to study the ramifications of two conflicting tax-increase measures on one ballot. In an interview, Mayor Pete Tucker, a member of the city committee, said if two conflicting measures are approved by voters, the one that gets the highest number of votes might take effect by itself, shouldering out the other one.
“It might be very confusing in the community to have two sets of business-license tax measures at the same time,” Councilman Howard Fishman told his colleagues at their regular meeting on Tuesday.
He said it would be important make clear to the public the differences between the potential measures, noting that a proposal by the city committee is likely to be “different than what Mr. Lissner is proposing.”
Lissner’s ballot initiative could balloon the business license tax from $2,268 a year to more than $100,000 a year for many Pier Plaza nightspots. He says that alcohol-serving nightspots force City Hall to spend inordinate amounts of money on police patrols and firefighter-paramedic services.
Ron Newman, a partner in Sharkeez restaurant on the Pier Plaza, predicted that voters will reject Lissner’s measure.
“The [city committee] is coming up with a pretty good package, with good increases for restaurants and bars – not $100,000, a lot of these guys are barely scraping by,” he said.
“If the city puts a proposal together that is balanced and fair, citizens will see [the Lissner initiative] as something that is ridiculous, and not vote for that,” Newman said. “…Most people, I think, would not like to penalize one group, especially if the city does not get as much money,” Newman said.
Newman also predicted a legal challenge if the Lissner initiative passes, echoing the sentiments of attorney Bill Beverly, who has represented some Hermosa restaurants. Beverly has questioned whether the nightspots cost the city a disproportionate amount of money, and whether the initiative would reasonably address the issue.
Lissner has said he expects a legal challenge, and believes his initiative would survive it.
He pointed out that the city last year increased vacant staff positions to 14, and reduced the Fire Department’s per-shift staffing from six firefighters to five.
“Hermosa public safety [police and fire] expenditures are taking more and more of the city’s income, leaving a decreasing portion to pay for other city services. In fiscal year 2009-2010, the city’s overall tax revenue dropped to $19.5 million, while the cost of public safety increased to $17.3 million,” Lissner wrote in a notice of intent to gather petition signatures.
“Some of Hermosa’s restaurants and bars have been making extraordinary and increasing demands on city services, while the city’s business license tax on the categories including the largest and most intensively developed restaurants and bars is a flat $2,268 annually,” Lissner wrote.
On Monday, Pier Avenue businessman Fred Hahn told the city committee that Lissner’s initiative would send the license tax for his establishment, Patrick Molloy’s, leaping to $81,000.
“That’s a big jump,” Hahn told the committee.
Hahn said the committee should avoid proposing any hefty and sudden increases in the business license tax, especially in the current economic downturn.
Hahn said his revenues have dropped 11 percent this year, on top of a 9.5 percent drop last year.
“We don’t mind paying our fair share, but it has to be our fair share,” he said.
Tucker told Hahn the committee might recommend license tax increases phased in over two years or so, but he also questioned whether a “fair share” of license tax is indeed being paid.
Hahn also said Lissner’s proposal aims to eliminate nightspots.
“Mr. Lissner’s thing is geared toward getting these businesses out of business,” he said.
Lissner has said he does not think the tax increases would drive nightspots out of business.
“I think it will be a considerable expense to them, but it is not cheap to operate these places, and they can pass [increased costs] along to their customers,” he said when he began gathering signatures.
“What might happen is it might cause some places to adjust their hours to keep the cost of their business license down,” he said.
As an example of an alcohol-serving establishment that would pay a lower business license tax, Lissner offered an off-the-cuff computation for La Playita, on 14th Street near Noble Park. Despite full liquor service, the eatery would see its tax drop to $450 or so, Lissner said, because of the absence of “multipliers” such as dancing, late hours and nearby alcohol establishments.
But he said “almost anybody” on the Pier Plaza would see their tax rate “go up a lot,” topping $100,000 “very easily.”
“The bigger you are, the more privileges you have – such as dancing, full liquor, late hours, and being in a more concentrated area – the more expensive it would be,” he said.
Lissner, a persistent critic of the city’s nightlife and opponent of new liquor licenses for Hermosa businesses, won a ballot battle in 2007 before his issue could even come to a vote.
He mounted a petition drive place a referendum before voters, aiming to limit the expansion of individual nightspots. Sharkeez mounted a counter-drive, and police were called several times as the two sides argued at shopping centers, and went door-to-door through Hermosa neighborhoods to plead their cases side by side.
Lissner won in the end. He qualified his referendum for the ballot, and the then-City Council responded by rescinding its own pro-expansion ordinance, without waiting to see whether the voters would do it for them.
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