February 15, 2003, Saturday

SECTION: BUSINESS; Pg. C01

LENGTH: 622 words

HEADLINE: Costs survey puts San Bernardino first : LEVIES: Researchers say the city's businesses shoulder Inland's heaviest municipal tax burden.

BYLINE: ADAM EVENTOV; THE PRESS-ENTERPRISE

BODY:

It costs more to do business in San Bernardino than any other
city in the Inland Empire, according to a survey released Friday.

The city's taxes on utilities and business licenses make
operating a business in San Bernardino more expensive on a
year-by-year basis than in any other location in the two Inland
counties.

That's according to the annual Kosmont-Rose Institute Cost of
Doing Business Survey that examines fees that 234 cities and
counties impose on businesses nationwide.

"We're not competitive," San Bernardino Councilman Neil Derry
said. "We haven't been competitive for 30 years, and that's
tragic."

Larry Kosmont, whose Los Angeles-based real-estate consulting
firm helps produce the survey, attributed the higher cost of doing
business in San Bernardino to the city's high business licenses
fees and its 8 percent tax on utility usage. He noted that many
other cities in the Inland region to not even have utility taxes.

Cities that compete for new development, such as Rialto,
Redlands, Ontario and Rancho Cucamonga, don't have the utility tax,
Derry said.

San Bernardino considered lowering its utility tax but tabled the
idea. The city is unwilling to part with the revenue at a time when
the state's budget crisis is creating uncertainty over the city's
future budgets, Derry said.

In the meantime, the fees are acting as an obstacle for
development.

"The cost of doing business does impact a company's decision to
locate to a city if they have a heavy tax structure," said
developer Gary Edwards, vice president of Western Realco.

Companies can go to other cities that aren't as expensive. The
higher costs also force landowners to charge less for rents to
offset the cost of doing business in a more expensive city, Edwards
said.

Kosmont's company and the Rose Institute of State and Local
Government at Claremont McKenna College found that overall, it is
still cheaper to do business in the Inland Empire than many other
parts of California.

"The Inland Empire has the double attraction of low taxes and
comparatively low land costs," Kosmont said.

Tough freeway commutes also have created a work force that is
willing to work locally for less than what they can get in
neighboring counties, said regional economist John Husing.

The survey examines other costs of operations, including
electricity rates, labor and one-time fees, but it includes that
information only in individual profiles, said Christina Williams,
project manager for the Rose Institute.

Williams added that cities such as Rancho Mirage and Temecula are
cheaper places in which to operate a business, according to the
survey, because the comparison takes into account only business
taxes and utility taxes.

This year's survey does not include the new development fees for
transportation being imposed by Riverside County and cities in
western Riverside County. In future surveys, the institute will
take into account one-time fees, Williams said.

* * *

TALE OF THE TAPE

The Kosmont-Rose Institute Cost of Doing Business Survey compares
the overall cost of business taxes, utility user taxes and property
taxes for the following Inland areas:

MOST EXPENSIVE
(STARTING WITH MOST)

San Bernardino

Fontana

Moreno Valley

Riverside

Palm Springs

Indio

Redlands

Rialto

Adelanto

Victorville - Colton (tie)

LEAST EXPENSIVE
(starting with least)

Unincorporated Riverside,
San Bernardino counties (tie)

Hemet

Chino

Corona

Upland

Temecula

Ontario

Rancho Cucamonga

Murrieta


SOURCE: KOSMONT COS.

GRAPHIC: GRAPHIC

LOAD-DATE: February 17, 2003