Step Aside, Seattle; O.C. Is Less-Taxing on Businesses

Orange County, surprisingly, is a relatively affordable place to do business when it comes to local taxes, an extensive new study has found.

Anaheim, Brea, Costa Mesa, Cypress, Fountain Valley, Fullerton, Garden Grove, Huntington Beach, Irvine, Mission Viejo, Newport Beach, Orange, Tustin, Westminster, Yorba Linda and the unincorporated portion of the county all ranked as “very low cost” in the annual “Cost of Doing Business Survey” by the Los Angeles economic development consulting firm Kosmont & Associates. Only Santa Ana scored a slightly higher rating, “low cost.”

The survey measured the comparative costs of local business, electric, telephone and property taxes. By contrast, some cities that compete with Orange County for businesses--and are often perceived as having lower costs--were found to be more expensive. For example, Phoenix, Portland and Seattle were deemed to be “high cost.”

Larry Kosmont, president of the firm and a former city manager, said that Orange County’s strong rankings are due to the region’s relative youth. Older cities such as Los Angeles, for instance, charge higher taxes to help offset their costs of replacing an aging infrastructure.

Another key factor is Orange County’s booming economy. “Through the years, Orange County has been blessed with an increasing, growing economy, which means the cities have benefited from sales-tax revenues and new housing,” he said. “They certainly can afford to have lower tax rates on utilities and business.”

But not all the news was good for local businesses.

The survey also included case studies of 26 Southern California cities, and found that Irvine was the most expensive--with Santa Ana and Anaheim close behind--when it came to fees charged to develop office and manufacturing projects. Fees for a typical 60,000-square-foot office building in Irvine could run as high as $874,000, it found.

Real estate costs are a big factor in business location decisions, Kosmont said. And because they’re so high in Orange County, he said, “businesses might be looking for some incentives” to reduce those costs.

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Patrice Apodaca covers economic issues for The Times. She can be reached at (714) 966-5979 and at patrice.apodaca@latimes.com.