REGIONAL REPORT : Ubiquitous Garage Sales--Big Business, Big Problem : Enterprise: They generate millions of dollars but no tax revenue. Some cities have limited their frequency.

Lori’s patchy, brown lawn is littered most days with a sadly eclectic mix of weathered furniture, cardboard boxes stuffed with old clothes and stacks of tattered paperbacks--all on sale for a few dollars or a few cents.

But this is no spring cleaning. It is instead a way to pay the bills and feed her 3-year-old son, a sign of individual enterprise in a desperate economy.

An unemployed insurance saleswoman, Lori, 37, narrows the gap between her expenses and her $500-a-month welfare checks by running a perpetual garage sale on the lawn of her Chatsworth home, an unsightly but effective venture that can bring in as much as $350 in a weekend.

“You can live off it, if you do it right,” said Lori, who culls most of her merchandise from dumpsters and curbsides in the northwest San Fernando Valley. She asked that her last name not be used so her welfare benefits would not be revoked.

Garage sales have become big business in recent years, generating millions of dollars in Southern California, according to some estimates. And as the recessionary noose tightens, many like Lori are turning their front lawns and driveways into regular showrooms of castoffs and hand-me-downs.

It is impossible to calculate exactly how common the phenomenon is because most proprietors are secretive. They are often unwilling to give their names, and many deny outright that their sales are regular affairs--even though their yards and driveways regularly are stacked with merchandise. The Times tracked a dozen regular garage sales across Southern California over several weeks last month, but only Lori acknowledged that she was running a business.

For example, a Winnetka man named Nate flatly denied that he had held three garage sales in as many weeks, despite repeated observations by a reporter over several months. “It’s not a business for me,” Nate said. Three days later, however, the telephone pole outside Nate’s home was covered with spray-painted signs pointing into his garage, where clothes, lamps and old toys were on display.

Proprietors have reason to be discreet.

Successful sales can raise hundreds, even thousands, of dollars in a single weekend--money that is rarely declared or taxed. The more profitable sales are generally held less frequently--maybe every three or four weeks--which allows extra time to collect a larger and more expensive inventory.

In any case, cities are deprived of sales tax revenue. Legitimate merchants are undercut. And many people who live near these neighborhood bazaars say they make communities look downright junky--”like ‘Sanford and Son,’ ” said one.

“It looks like a rummage sale,” said Bill Matheus, chairman of the property maintenance committee for the Huntington Harbors Property Owners Assn. in Huntington Beach. “And then you’ve got all these yokels . . . coming through the area with their clunker cars and stacking a bunch of crap on top of them.”

But often there is little that can be done to stop them. Most who run these regular sales do not have business licenses or permits and operate in a gray area of the law--not explicitly illegal in most cities, but not entirely legitimate either. Some communities have ordinances regulating garage sales, but many more do not, and prosecuting these modern-day rag pickers is next to impossible.

“It is nothing we can enforce,” said Joe Hernandez, a supervisor for the Los Angeles Department of Building and Safety’s citation division. “If we can show they are conducting a business out of their house, then we have something. But that is very difficult to prove.”

Difficult indeed, considering that Hernandez is one of only six code enforcement officers in the city of Los Angeles. Their duties include enforcing all types of zoning violations, and habitual garage sales are at the bottom of their list.

In the San Fernando Valley, for example, the two inspectors responsible for the area receive 10 to 15 complaints a month about perpetual garage sales, but they have issued only about 60 orders to stop in the past year. Detective Steve Bernard, who heads the Los Angeles Police Commission’s permit enforcement detail, said his unit files misdemeanor charges on, at most, two people a year for running secondhand businesses out of their homes.

Even if there were enough personnel to crack down on repeat offenders, Hernandez said, most garage sales occur on weekends, and code enforcement officers work Monday through Friday. Weekend work requires written permission three weeks in advance, and even then it is limited to one weekend day per month.

In the intervening weeks, a determined peddler often can reopen shop and continue business.

Faced with the potential siphoning of their sales tax revenues and complaints from residents tired of their neighborhoods turning into flea markets, cities around Southern California have tried to regulate garage sales and prevent them from becoming regular affairs.

Cities such as Stanton in Orange County have passed ordinances limiting to four the number of garage sales a family may hold each year. Others such as Monrovia in the San Gabriel Valley go so far as to patrol neighborhoods on weekends to stop illegal sales.

Officials in those cities said such regulation has helped prevent perpetual garage sales by requiring cheap permits--$5 in Stanton--to be purchased at City Hall before sales can be held. If a person surpasses the limit, no more permits are issued until the following year. There is no record of anyone being prosecuted for violations.

In the city of Los Angeles, officials are drafting an ordinance similar to Stanton’s--but even more restrictive. It would limit to two the number of garage sales a family would be allowed to hold each year.

Currently, code enforcement officers follow informal guidelines that three or more garage sales a year constitute a business and the offender can be prosecuted on zoning violations.

Although the proposed ordinance was suggested nearly three years ago by City Council President John Ferraro, the draft ordinance was lost in the city bureaucracy until The Times requested information on it in October.

It is scheduled to come before the City Council before the end of the year.

The thought of such an ordinance frightens Lori, who said that without the extra money she earns from her sales, she would be unable to make ends meet. “I can’t live off welfare alone,” she said.

Organizing her wares on a recent morning, Lori sounded like a business school professor as she detailed the subtleties of merchandising and presentation.

“You always have to move stuff if you’re going to be successful,” she said, lugging a box of paperback books from the side of her house. Stacked neatly in the back yard were boxes of old clothes, bins of computer equipment and hundreds of books--a virtual warehouse of merchandise squirreled away for future sales.

Just like businesses in the mainstream economy, those who hold regular garage sales have their own supply system and distribution network. Some buy items at other garage sales, spruce them up and sell them for a profit a few weeks later. Others such as Lori recycle most of their merchandise, salvaging it from dumpsters and trash cans.

Rarely is merchandise at a yard sale stolen, said police investigators and garage sale aficionados. Most stolen goods are moved through swap meets, which are patrolled from time to time by detectives.

“It’s amazing what people throw away,” said Lori, nodding toward a box of computer programs scavenged on one of her regular rounds through the rubbish of shopping malls and industrial complexes. “There is a gold mine going out in the trash.”

She is proud of her discarded discoveries--books, outdated computer software, fresh rolls of film, batteries, bathing suits and bedroom sets from the 1960s. But she is hardly proud of the occupation in which she finds herself.

“People call it ‘trashing.’ I get laughed at, frowned on when I dig through the garbage can, but usually there is no garbage in them,” she said, recalling the first time she saw a person dig through the trash.

It was through a bus window in Seattle and it made her cry.

For Chris Stevenson, making money with garage sales takes a certain skill--an eye for value and a knack for knowing how to repair things. Stevenson is the author of “Garage Sale Mania: How to Hold a Profitable Garage, Yard or Tag Sale.”

When he held regular sales at his Huntington Beach home, Stevenson said, he would collect merchandise over several weeks, mostly at other yard sales and swap meets. “I’d go around to the garage sales on the weekends and look over the inventory,” he said. “I might offer some guy 200 bucks for the whole thing. That’s a juicy little chunk.

“So I’d bring it back, detail it and double or triple the value,” he said. “I’m a fix-it man. I know how to fix a VCR or a TV’s volume or why the channel changer doesn’t work. I know what I can get away with in terms of prices. I have a sort of ‘gray book.’ ”

Enterprises such as Lori’s and Stevenson’s are in many ways examples of unfettered capitalism--no regulations, no taxes and no safety net, said Richard Day, an economics professor at the USC.

“What they are basically doing is buying low and selling high, at very low margins, of course,” he said. “If you were a legitimate business, you could not afford to do this sort of thing.”

Exactly, complain legitimate merchants--especially secondhand dealers, who say that regular garage sales undercut them on prices, luring their customers out of the shops and onto the front lawns.

“It just puts a heavy, heavy burden on the city and on the businesses,” said Ann Kinzle, executive director of the Reseda Chamber of Commerce. “Even if these people are steering clear of the thrift stores, it definitely has an impact.”

Day agreed with Kinzle’s assessment: “Anything that avoids taxation illegally is a form of plunder.”

But, he added, there are benefits. In tough economic times, a place where customers can buy a shirt for a quarter or a blender for $2 serves a purpose.

“In a time like this when there are people who are out of work or living at a very low income, when they can get their hands on goods they need, in that sense its a very positive development,” he said.

Lori summed it up more simply.

“People want a good deal,” she said. “I give them that.”