Group Disputes City of Industry on Population

A business organization critical of the city’s financial practices says it has uncovered evidence that Industry is collecting more tax revenue that it is entitled to because the population may be less than half what the city claims.

The Industry Civic Planning Assn., a 100-member business group, contends that the population has declined to 310 as of last December. The city has estimated its population at 707 up from the 1980 census of 663.

Under the state’s 1979 Proposition 4 (widely referred to as the Gann Initiative), state and local governments are limited in the amount of money they can appropriate to finance government operations. The limits are based on a formula dictated by increases or decreases in the cost of living and population.

Dan Peterson, the association’s executive director, contended that the inflated population figures will cost Industry residents and businesses $12 million more in taxes this year than they should have to pay. The total amount of taxes to be collected this year should be cut by that figure and an accurate population count should be made, he said.

Report Prepared

A report prepared by the organization claims that its findings are based on a three-month investigation that included the use of aerial photos and a house-to-house survey to determine the number of residents living in the city.

Peterson said that a comparison of aerial photos from 1980 and 1985 revealed that the number of homes in the city had dropped by 70. He said that he could only find evidence that six new homes were built and one mobile home was installed during that period, a claim consistent with state and county records.

Based on observations after at least two visits to each home, Peterson said he estimated that 1.95 people lived in each residence for a total of 156 people. In addition, the city reported that 154 people were living at El Encanto Convalescent Hospital in Industry last November, a figure Peterson said had been confirmed by hospital officials.

Peterson added those two population figures to arrive at his estimate that 310 people lived in the city last December.

“Every place you go, you don’t see many homes,” he said. “That’s what made me curious.”

Mayor John Ferrero, City Manager Chris Rope and City Atty. Graham Ritchie did not return calls from The Times. City Clerk Philip L. Iriarte, whose job it is to certify population estimates each year, explained his methods for determining those figures, but refused to respond to the claims by the organization. Iriarte said that he believes that 707 is the correct population figure.

Peterson, who drafted the report, said he has asked for an investigation by the Population Research Unit of the state Department of Finance, the department mandated by the state Legislature to provide cities with population and economic data used to calculate annual appropriation limits.

Elizabeth Hoag, manager of the research unit, said her department will begin investigating the claims in two to three weeks.

“We want to have an estimate that is accurate,” Hoag said. “It looks like he’s (Peterson) done a very thorough count of the housing units. We will talk to the city about this.” As far as she knows, she said, this is the first time a private citizen has attempted to do a population count for a city.

Many cities do not keep accurate records, but it is not a crime to provide wrong population figures to the state, Hoag said.

She said that population changes and economic factors are used in a formula for calculating the appropriations limit called for by the passage of Proposition 4.

Tax reformer Paul Gann proposed the initiative in the wake of Proposition 13, which had set a limit on property taxes. Proposition 4’s purpose was to prevent governments from the profligate spending of any revenue windfalls.

The measure requires cities, counties and the state government to establish an annual limit beyond which they cannot spend. Hoag said government entities, including cities like Industry, usually set their tax rates high enough to raise the maximum amount allowed under the limits.

The revenues covered by the appropriations limit include property and sales taxes, Hoag said.

Her research unit provides the population and economic figures on which cities base their appropriations limits. In most cases, the research unit gets its population information directly from cities.

Cities Provide Information

Hoag said cities provide the department with the number of occupied housing units, including apartments, persons living in group quarters, such as hospitals, and the numbers of new or demolished housing units.

Industry is an exception, she said.

The city’s population changes are reported to the state in a two-step process that starts at City Hall, said George Marr, head of the population studies section of the Los Angeles County Regional Planning Department.

Plans for building or demolishing any structure are approved by the city. Under a contract with Industry, the Los Angeles County Building and Engineering Department issues the appropriate permits. The county agency then provides the state research unit with the numbers of permits issued each year. The state population unit uses that information to help determine population changes.

Peterson said he first became aware of the role population plays in determing a city’s tax rate last September when the City Council approved a new appropriations limit of $27 million, up $1 million from the previous year.

Suspected Decline

Because he suspected that the population was declining, not rising, Peterson said he could not understand how the city could raise the appropriations limit.

“They’ve (the city) got to know that population change affects that number tremendously,” he said.

Peterson said he launched his survey on behalf of the association, a group of primarily medium-to-small businesses that has criticized the city for having the highest tax rate in the county, after he discovered that demolition permits for several homes that had been torn down did not appear on county records.

Marr and Hoag said their records show that no demolition permits have been issued by the county for Industry since April, 1980, and that only six building permits and one mobile home permit were issued during the same time period.

Aerial Photos

Peterson said that aerial photos taken of the city by American Aerial Surveys Inc. of Covina tell a different story.

The Industry Civic Planning Assn. hired the firm last December to take aerial photos and compare them with photos the firm took for the city in 1980. That year, 150 houses were shown in the photos, but by 1985, only 80 homes could be found in the photos, Peterson said.

Peterson said he conducted a house-to-house survey to determine if the 80 homes were occupied. He said he visited each home at least twice to observe and then estimated the number of people living in each residence.

He said he never attempted to talk to the occupants, because “I didn’t want to alert anyone to what I was doing. You start walking around the city the way I did, and it would be back to City Hall before I left the city limits.”

Still, he insisted, “I’m not afraid of them (state and county population researchers) going out and finding 80 houses. I begged them to come with me to show them.”

If the state population unit finds after its investigation that Industry’s population has been overestimated this year or in previous years, Peterson said he wants the city to lower taxes.

“I want to plant in the business people’s minds, ‘Hey fellas, they don’t need to collect all this money.’ ”

But Hoag said that even if Industry’s present and past population estimates prove to be inflated, this will not automatically translate into lower taxes this year. She said that taxes can only be lowered if population estimates for the current year are found to be in error.