City Mandates Ordinance to Allow Home-Based Businesses

By HUGO MARTIN

July 11, 1996 12 AM PT

TIMES STAFF WRITER

After more than a decade of debate, the Los Angeles City Council moved Wednesday to regulate and license a large part of the city’s underground economy by voting to draft an ordinance permitting businesses to operate out of residential homes.

The vote, on an issue that has been discussed at City Hall for 11 years, brings Los Angeles in line with 77 other cities in the county that have already legalized home-based businesses.

According to one study, there are about 300,000 illegal home-based businesses operating in the city and up to 3 million in the state. City Controller Rick Tuttle estimates that the city can collect at least $5 million annually in business taxes from such operations.

Proponents say the vote signals the city’s recognition of the changes in the business world brought about by personal computers, modems and fax machines that make working at home possible.

“I see this as a train that left a long time ago and we are huffing and puffing to grab the rail on the caboose,” said Councilwoman Laura Chick, who along with Councilman Rudy Svorinich Jr. championed the proposal.

But opponents of the measure worry that the city won’t be able to regulate the thousands of home-based businesses that the law would allow. They fear that without a tough enforcement program, businesses would generate traffic, noise and visual blight with signs that would ruin the character of residential neighborhoods.

In the end, the council agreed to language for an ordinance after a compromise was reached between Chick and Councilman Hal Bernson, who heads the council’s Planning and Land Use Committee.

Under the agreed-upon language, the city would adopt 21 performance standards prohibiting excessive noise, traffic, signage and other changes that could ruin the character of neighborhoods populated by single-family homes.

The ordinance would also include a list of 26 businesses that would be prohibited, including auto-repair shops, massage parlors, gun stores and retail outlets.

In addition to a regular business license based on gross receipts, the law would impose an annual $25 fee to pay for a team of at least three city inspectors to regulate home-based businesses.

The council instructed the city attorney’s office to draft the law and return it to the council for a final vote next month. Once it is signed by Mayor Richard Riordan, who has voiced his support, the measure becomes law after a legal notice is published.

Although most other cities in the county have legalized home-based businesses in the last 10 years, Los Angeles has continued to prohibit them. The only exceptions allowed have been doctors, dentists and ministers. Thus far, the city has only investigated violations based on neighbor complaints.

In 1986, late Councilman Howard Finn instructed city analysts to write a law permitting businesses in residential areas. Since then, the measure has been shuffled back and forth between planners, zoning enforcement officers and council committees.

The primary debate has centered on how to regulate home-based businesses to ensure that they don’t ruin the character of neighborhoods. Several versions of the latest measure have been drafted and redrafted over the years.

In Sacramento, state Assemblywoman Debra Bowen (D-Marina del Rey) authored legislation in 1992 requiring every jurisdiction in the state to adopt regulations permitting home-based businesses. Although the bill passed both houses of the Legislature, it was vetoed by Gov. Pete Wilson, who said the problem didn’t warrant a state law.

Two years ago, Svorinich reintroduced Finn’s motion in hopes of imposing standards on the thousands of businesses operating illegally in the city and tapping them for much-needed license fees.

But Bernson, who represents parts of the northwest San Fernando Valley, criticized the proposal, saying the city does not have the staff to enforce a home-based-business law. He also feared that the unregulated businesses will turn residential neighborhoods into commercial zones.

“I have never seen a piece of legislation more dangerous to the city than this one,” Bernson said.

As an alternative, Bernson proposed his own version of the measure that would only allow a short list of occupations.

After some debate, Bernson dropped his version after Chick and Svorinich agreed to add an amendment that gives city inspectors the power to quickly fine and close home-based businesses that create noise, traffic or other problems in a neighborhood.

Nonetheless, the proposal was still opposed by homeowner groups, the Building and Safety Department and Councilman Nate Holden, all of whom argued that the city would not be able to regulate home-based businesses.

“You will have nothing but problems on top of problems on top of problems,” Holden said. “You are going to destroy our neighborhoods.”

Indeed, Gordon Murley, president of the Federation of Hillside and Canyon Assns., said he feared the proposal would ruin residential areas.

“You have a number of ordinances that have not been enforced, so how do we expect this to be enforced?” he asked.

But supporters argued that such businesses already operate in the city with or without a law.

“It’s informally accepted that anyone can work at home,” Councilman Richard Alarcon said. “We ought to set the standards and let people know what is permitted and what is not.”

Councilman Joel Wachs agreed. “You can’t simply put your head in the sand and say what exists doesn’t really exist.”

Before the vote, about 20 owners and operators of home-based businesses held a rally on the steps of City Hall, where they waved signs that read “Home Sweet Workplace,” “’President Clinton Is Home Based” and “‘We’re Breaking the Law.”

During the meeting, they urged the council to permit home-based businesses, saying that working at home reduces traffic and smog and allows parents to spend more time with their children.

Said Katherine Hughes, who produces a telephone directory out of her Northridge home: “Responsible home-based businesses should be encouraged, not ignored.”

James Stewart, who operates a video production business from his Panorama City home, said the city of Los Angeles is at a competitive disadvantage with other cities that allow home-based businesses.

But he also chided the city, saying the city clerk’s office collects license fees from home-based businesses, even though they are considered illegal.

“You collect taxes from us and yet we are illegitimate businesses,” he said. “That is unethical.”

Claudia Phillips, a Westside attorney specializing in bankruptcy law, supports a residential business ordinance. She said the Building and Safety Department had issued her a notice to shut down her business by Aug. 15 or face a possible misdemeanor violation.

Phillips said she runs a solo practice and cannot afford to rent an office. Plus, she said, by working at home she can care for her two children, ages 4 and 7.

“So, I implore you to adopt this,” she said.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

No Home for These Businesses

Some of the businesses that would be prohibited under the city’s new home-based business ordinance:

* Adult entertainment

* Ambulance service

* Animal training

* Automotive repair

* Funeral home

* Garment manufacturer

* Gun manufacturer or sales

* Gunsmith