Countdown in Industry: State Orders Review of Disputed Population Data

Times Staff Writer

A state agency has told city officials to determine exactly how many people live in Industry in the wake of allegations by a business organization that the city's population is half of what it has claimed.

The request by the Population Research Unit of the state Department of Finance was triggered by a report released last month by an Industry business group that has criticized the city's financial practices.

A report, prepared by the 100-member Industry Civic Planning Assn., contends that Industry's population had declined to 310 by last December. The city has estimated its population at 707, up from the 1980 census of 663.

"We are concerned about it," said John Malson, a research manager with the state population unit, who met with Industry officials on Feb. 25. "We want to make sure the information they provided us is correct. We rely heavily on cities to provide us that information."

City officials "were somewhat upset" with the request, Malson said, but agreed to "address the issues" raised by the association.

The U.S Census Bureau also has been asked to review procedures used in determining Industry's 1980 population to find out if any mistakes were made in the federal study.

3-Month Investigation

Dan Peterson, Industry Civic Planning Assn. executive director, said his organization's report was based on a three-month investigation that involved comparisons of aerial photos and a house-to-house survey to determine the number of city residents. Comparison of aerial photos taken in 1980 and 1985 showed that the number of homes in the city had dropped by 70, said Peterson, who drafted the report.

Based on observations after at least two visits to each home, Peterson said he estimated that an average of 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 that Peterson said had been confirmed by hospital officials. He added those two population figures to arrive at his estimate that 310 people lived in the city last December.

Malson said that during his meeting with city officials last month he asked them to review the conclusions reached by Peterson.

City officials have refused to comment on the association's report or the state research unit's request.

But a March 5th letter from City Manager Chris Rope to Peterson indicates that the city has started to comply with the state research unit's request.

In the letter, Rope asks for Peterson's permission "to purchase copies of those (aerial) photographs" used in the report.

Peterson said in an interview that he has "nothing to hide" from the city, adding that the association will provide the photos to Rope for $750, what it cost the association to purchase the photos from American Aerial Survey, the Covina firm hired by the association to photograph the city.

Peterson said that the inflated population figures mean that Industry residents and businesses will pay $12 million more in taxes this year than they should have to pay.

But state officials said that even if the population is lowered dramatically, it may have little effect.

Under Proposition 4, commonly known 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 determined by increases or decreases in the percentage change in population and the cost of living.

Profligate Spending

Proposition 4's purpose was to prevent governments from profligately spending any revenue windfalls.

The measure requires cities, counties and the state government to establish an annual limit beyond which they cannot spend. Government entities, including cities like Industry, usually set their tax rates high enough to raise the maximum allowed under the limits, said Elizabeth Hoag, the research unit's manager. The revenues covered by the appropriations limit include property and sales taxes, said Hoag.

But even if Industry's population figures are found to be in error, the city's appropriations limit may not be lowered, Malson said.

If the biggest percentage drop in population came any time before 1985, the appropriations level for 1986 could not drop, Malson said. Because of the way the state Legislature has interpreted Proposition 4, the only time a percentage drop in population could result in a lower appropriations level would be if it occurred in the previous year, he said. The drop must be recorded in the year it actually occurs; otherwise, under the law it would have no effect on the appropriations level for subsequent years.

The only thing the state research unit is obligated to do, he said, is correct the inaccurate population estimates of previous years.

"From what I've looked at," Malson said, "the majority of the error may have been committed by the census bureau" during its 1980 population count. After talking with census officials, Malson said census takers may have counted homes as being in Industry that actually were in another city.

'Easy to Get Wrong'

In Industry, he said, "it's really easy to get this wrong because the city's boundaries are so terrible." He is awaiting an official report from the census bureau, Malson said. "It may be a time-consuming process" to review 1980 records, he said.

Hoag said that many cities do not keep accurate records and that it is not illegal to provide inaccurate population figures to the state. However, if a city deliberately misrepresents its population, the research unit can withhold the information needed by cities to set their annual appropriations limits until accurate information is provided, Malson said. Peterson contends that U.S. Census figures show that there were 150 houses in Industry in January, 1980. Aerial photographs taken for the city by American Aerial Surveys seven months later show only 83 houses, he said. The aerial photographs taken by the firm last December for the association showed only 80 homes, he said.

Hoag said she has asked the U.S. Census Bureau and the population research unit of the Los Angeles County Regional Planning Department to review their Industry population records, starting with 1980. She said both agencies provide data to the state research unit for use in estimating municipal populations.

In addition, she said, city officials have been asked to review their records of residential demolitions and new home construction. Cities use these records to certify or amend annual population estimates made by the state research unit, Hoag said.

Reports Due Friday

She said she has asked the city, county and federal agencies to report back to her by Friday.

Peterson said he was pleased with the population unit's request. "We are a taxpayers' group who just want the population (figures) adjusted according to the law," he said.

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

Because he suspected that the population was declining, not rising, Peterson said he could not understand how the city could raise the appropriations limit. He said he launched his survey on behalf of the association, a group composed primarily of small- and medium-sized businesses that has criticized the city for having the highest tax rate in the county, after he discovered that demolition permits for several homes did not appear on county records.

The number of occupied residential units is a key indicator used in determining a city's population.

Builders whose plans for demolishing or building structures have been approved by the city are granted building permits by the Los Angeles County Building and Engineering Department under a contract with the city. The county agency then provides the state research unit with the numbers of permits issued each year, figures the state agency uses to help determine population changes.

Records of Activity

Malson said, however, that city officials told him that they did not have records of building and demolition activity they could review.

W. W. Shepherd, president of the Industry business group and general partner of Shepherd Management Services Inc., said he still finds it difficult to believe that city officials did not know that Industry's population had shrunk so drastically.

"The ICPA directors have failed to understand how city officials could be unaware that the city's population was declining while houses were being demolished for industrial or commercial development," Sheppard said.

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