Storage Facility Files Suit Against El Segundo Over Business Tax, Meetings Law

The owners and managers of a mini-storage facility in El Segundo have sued the city, charging that its business license tax is unconstitutional and that the City Council has violated the state’s open meetings law to discuss the tax.

In a 20-page lawsuit, attorney Bradley D. Ross contends that the tax should have been put to voters, rather than approved by the City Council, and that it is used to drive out companies that do not provide a large amount of revenue to the city.

Ross said that tax notices for Public Storage Inc., which opened a franchise at 1910 Hughes Way about two years ago, were sent to the wrong address. Eventually, the city sued four companies affiliated with Public Storage, demanding that the companies pay $120,124 in taxes and late-payment fines.

The companies paid the tax under protest last December, Ross said, and since have paid $18,000 more to cover the tax for 1991, including $3,000 in late penalties. The companies filed suit earlier this month after city officials failed to respond to their formal protests and requests for an accounting of how the charges were computed.

Ross said his clients have been particularly perturbed by the amount of the tax.

City Atty. Leland Dolley said the business license tax for warehouses--which includes mini-storage facilities--is $50 per year plus 10 cents per square foot.

Neither Ross nor Dolley knew the square footage of Public Storage’s El Segundo facility, and officials of Public Storage referred questions regarding the facility to Ross.

“Public Storage operates over 1,000 facilities throughout the country, hundreds of them within California, and we know of no other business license tax that’s even in this neighborhood (of $18,000),” he said. “Most of them are $100 or a couple hundred dollars.”

Dolley said the city is still analyzing the lawsuit, but he said he believes the lawsuit is groundless.

“To me, the allegations are unintelligible,” Dolley said.

The suit asks that the tax be abolished and that the city refund what Public Storage already has paid. It also seeks $1 million in punitive damages.

Although the suit accuses City Council members of violating the Brown Act--California’s open meetings law--on Oct. 2, 1990, Ross declined to say what he believes the council did to violate the law.

However, he did accuse the city of destroying evidence.

“We sought certain tape recordings and documents from the city for several months. We kept being put off,” Ross said. “When we finally received them recently, certain portions of the tape recordings were blank, mainly the parts we were interested in.”

Dolley said he had no knowledge of any materials being released to Ross.

“I don’t have a response because I don’t know what he’s talking about,” Dolley said.

Dolley said he is certain that the City Council did not violate the Brown Act.

“We flatly deny that occurred,” he said. “I have been practicing 20 years, and we follow the Brown Act religiously.”