Councilwoman Chick Responds to Open Letter

Oct. 1, 1997

Bart Everett

Technical Resources Group

Los Angeles Times

Dear Mr. Everett:

After reading your open letter to me (Oct. 1, 1997), I wanted to write back to you and other writers to correct some misimpressions that have arisen about the city of Los Angeles’ Home Occupation Ordinance and the city’s business tax requirements.

While I know from your letter that this issue may have sent you and others “out to sea,” no new “home business tax” or “writer’s tax” was created or is being considered by the city of Los Angeles. Rather, all businesses, (including writers, whether home-based or office-based), have for many decades been required to have a business license and pay city taxes.

I worked hard to enact the Home Occupation Ordinance, passed by the City Council late last year, that now officially permits quiet home-based businesses to operate from a home if they meet 21 performance standards. The Home Occupation Ordinance is strictly a zoning ordinance that made no changes to the city’s tax structure.

In fact, until the Home Occupation Ordinance was approved, Los Angeles was one of the few major cities in the nation whose antiquated zoning laws prohibited most individuals from legally operating a business solely out of a residence. Previously, upon receiving a complaint from a neighbor, the city’s Building and Safety Department could shut down even a quiet, non-disruptive home-based business. The basic philosophy of the Home Occupation Ordinance is that if the business does not create additional traffic, noise or disruption beyond an ordinary residential use, then it should be permitted.

The city did institute a $25 registration fee for qualifying home-based businesses to obtain a Home Occupation Permit. This registration charge covers the city’s cost of processing the permit and enforcing the zoning provisions of the Home Occupation Ordinance. But, Mr. Everett, you should be aware that the city Attorney’s Office has now finally clarified that home-based writers who have no employees, no deliveries, no client visits and no external impacts at all are considered under the city code as an “accessory use” to the residential use rather than a “home occupation.” Such writers are exempted from the city’s requirement to register under the home occupation and pay the $25 charge. The legal requirements for most writers, therefore, remain exactly as they were before.

I want to help create a better climate to encourage entrepreneurial activities. I have therefore proposed that the city of Los Angeles create a minimum income threshold, below which no business license or business taxes would be required. This threshold would apply to all occupations, not only writers. Thousands of struggling Los Angeles writers earn little or no income in a given year. Why should such individuals be required to obtain a business license? But, by the same token, why should a writer earning $200,000 in a given year be exempted from paying taxes on that income, while other professionals earning the same income would be taxed?

Finally, the city is now in the process of reviewing its entire business tax structure through a “tax equity study.” This review of the business tax structure should lead to changes in the tax rates or tax categories affecting all businesses, including writers.

I hope this clarifies some of the issues you are concerned about. I invite you back from international waters to the city of Los Angeles. We welcome you here, always.

Sincerely,

Laura Chick

Council member

Third District