California businessman reveals the true reasons why he left the Golden State

Richard Rider, Chairman, San Diego Tax FightersUndesignated 9 Comments

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For me, one frustrating aspect of all the businesses fleeing California is that the departing CEOs won’t talk about the REAL reasons why they are leaving.  They are usually VERY careful not to speak ill about the progressives’ much-ballyhooed “workers’ paradise.”

But I must concede there are two very good reasons for these owners and managers to avoid telling the truth — criticizing the Golden State:

1.  Most businesses that leave California still do business in California.  This gives a bunch of CA state agencies the ongoing opportunity to harass a business and its CEO for years and years — up to and including criminal prosecution (which is becoming ever more popular in government agencies). The state FTB (handles corporate income taxes) can come after the company for both past and future taxes, and has a much worse reputation than the now-discredited IRS.

2. Speaking the truth about California’s anti-business climate would doubtless piss off many liberals in the state — and in the nation.  Boycotts can result, as more and more businesses are discovering. It’s just good business to keep one’s head down.

Below we have the exception to the rule — a feisty businessman who TOTALLY left the state, and does zero business in the state (though CA customers do come to him while traveling outside their state).  He owned and operated campgrounds primarily in Ventura County (and still owns campgrounds in other states).

It got so bad, he closed down or sold all his California properties.  He makes a profit in other states, but California was just a cash drain on his time and resources.

I’ve written about this libertarian-leaning businessman before, but this latest version from Joseph Vranich is a succinct, worthwhile read.

http://thebusinessrelocationcoach.blogspot.com/2016/07/a-july-4th-message-about-how-freedom-is.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+TheBusinessRelocationCoach+%28The+Business+Relocation+Coach%29

 

Saturday, July 2, 2016

A July 4th Message About How ‘Freedom’ Is Under Siege for California Businesses

Once in awhile I come across a business owner’s explanation of just how tough it is to run a commercial enterprise in California. I found one that amounts to “can’t-put-it-down reading.”

The writer, Warren Meyer, described conditions relating to the regulatory requirements, such as getting county permits, high unemployment insurance costs, concern over rising minimum wages, and the fact that all employee lawsuits against this multi-state company were in California.

I’ll let his words speak for themselves:

“Normally, the closure of a business operation or division is not grounds for a celebration, but in this case I am going to make an exception. At midnight on December 31, I not only drank a toast to the new year, but also to finally getting all my business operations out of Ventura County, California.

“Never have I operated in a more difficult environment. Ventura County combines a difficult government environment with a difficult employee base with a difficult customer base.

“It took years in Ventura County to make even the simplest modifications to the campground we ran. For example, it took 7 separate permits from the County (each requiring a substantial payment) just to remove a wooden deck that the County inspector had condemned. In order to allow us to temporarily park a small concession trailer in the parking lot, we had to (among other steps) take a soil sample of the dirt under the asphalt of the parking lot. It took 3 years to permit a simple 500 gallon fuel tank with [the California Air Resources Board] and the County equivalent. The entire campground desperately needed a major renovation but the smallest change would have triggered millions of dollars of new facility requirements from the County that we simply could not afford.

“In most states we pay a percent or two of wages for unemployment insurance. In California we pay almost 7%. Our summer seasonal employees often take the winter off, working only in the summer, but claim unemployment insurance anyway. They are supposed to be looking for work, but they seldom are and California refuses to police the matter. Several couples spend the whole winter in Mexico, collecting unemployment all the while. So I have to pay a fortune to support these folks’ winter vacations.

“California is raising minimum wages over the next 2 years by $2. [Note: The actual amount was higher.] Many of our prices are frozen by our landlord based on past agreements they have entered into, so we had no way to offset these extra costs. At some point, Obamacare will stop waiving its employer mandate and we will owe $2,000-$3,000 extra additional for each employee. There was simply no way to support these costs without expanding to increase our size, which is impossible due to County regulations.

“A local attorney held regular evening meetings with my employees to brainstorm new ways they could sue our company under arcane California law. For example, we went through three iterations of rules and procedures trying to comply with California break law and changing “safe” harbors supposedly provided by California court decisions. We only successfully stopped the suits by implementing a fingerprint timekeeping system and making it an automatic termination offense to work through lunch. This operation has about 25 employees vs. 400 for the rest of the company. 100% of our lawsuits from employees over our entire 10-year history came from this one site. At first we thought it was a manager issue, so we kept sending in our best managers from around the country to run the place, but the suits just continued.

“Ask anyone in the recreation business where their most difficult customers are, and they likely will name the Los Angeles area. It is impossible to generalize of course, because there are great customers from any location, but LA seems to have more than its fair share of difficult, unruly, entitled customers. LA residents are, for example, by far the worst litterers in the country, at least from our experience. Draw a map of California with concentric circles around LA and the further out one gets, the lower the litter clean-up costs we have. But what really killed it for me in Ventura County was the crazy irresponsible drinking and behavior. Ventura County is the only location out of nearly 200 in the country where we had to hire full-time law enforcement help to provide security. At most locations, we would get 1 arrest every month or two (at most). In Ventura we could get 5-10 arrests a day. In the end, I found myself running a location where I would never take my own family.

“And so I got out. Hallelujah.

“PS – People frequently talk about taxes in California being what makes the state “anti-business.” That may be, but I guess I never made enough money to have the taxes really bite. But taxes are only a small part of the equation.

“Update: Wow, reading this again, I left out so much! An employee once sued us at this location for harassment and intimidation by her manager – when the manager was her sister! It cost me over $20,000 in legal expenses to get the case dismissed. I had an older couple file a state complaint for age discrimination when they were terminated – despite the fact that our entire business model is to hire retired people and the vast majority of our employees are 70 and older. And how could I have forgotten the process of getting a liquor license? I suppose I left it out because while tedious (my wife and I had to fly to California to get fingerprinted, for example), it is not really worse than in other places – liquor license processes are universally bad …. We gave the license up pretty quickly, when we saw how crazy and irresponsible much of the customer base was. Trying to make the place safer and more family friendly, we banned alcohol from the lake area, and faced a series of lawsuit threats over that.”

Source: A Milestone to Celebrate: I Have Closed All My Businesses in Ventura County, California.

Note: It’s irrelevant that this piece was written more than two years ago because since then the business environment in California has gotten worse.

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One focus of this blog has been to address California’s difficult business environment, as addressed in the new study, California BusinessDepartures: An Eight-Year Review 2008-2015, (PDF) updated Jan. 14, 2016.

Joseph Vranich is known as The Business Relocation Coach while the formal name of his business is Spectrum Location Solutions. Joe helps companies find great locations in which to grow. Also, Joe has been a Keynote Speaker for more than 20 years – see A Speaker Throughout the U.S. and in Europe and Asia.

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Comments 9

  1. Paul, ask the Democrats. They hold 60+% majorities in both CA state legislatures. Indeed, since 1970, the GOP has NEVER had a majority in the State Senate, and had a majority in the State Assembly for only 2 years in the 1990’s.

    Indeed “my” GOP representatives have zero influence in Sacramento, except occasionally when they propose a bill to INCREASE government control and spending — a bill that meets with approval from the Democrat majority.

    YOUR Democrat representatives put this anti-business “tax and regulate” climate in place, and refuse to reverse course. Be proud. Take ownership.

  2. Richard, Why do you always have to be such an a-hole. I’m not nor ever have been a Democrat. I believe in good, fair government. Some of these stupid requirements that you have documented need to be addressed. They can be IF both parties are willing to work together. I think the problem today is even having a conversation with a Democrat is a mortal sin in your eyes, therefore nothing gets done and you get to play the victim.

  3. Oh, sorry, Paul. You always POST like you are a Democrat. My bad.

    Nevertheless, my point stands. Democrats rule in Sacramento.

    Explain to me your statement: [Problems can be addressed] “IF both parties are willing to work together.”

    Democrats don’t need to “consult” with Republicans — they have 60+% majorities. And so they don’t. Consult, that is.

    With comfortable majorities, Democrats pretty much do whatever they want. The committees are headed by the most extreme doctrinaire Democrats. The only bastion against their excesses is the governor’s veto.

    I’ve testified in state legislative hearings (pension reform), and I’ve watched with wonder the circus shows orchestrated by the Democrat chairmen of the committees. It’s more like street theatre. Republican legislators have little say in the proceedings.

    Pretending as you do that the Democrats need Republican cooperation on such reforms is patent nonsense. You’re trying to share the Democrats’ failed legislative policies with hapless Republican legislators. The fact is, the Democrats WANT to continue our state’s anti-business policies.

    Do you think that the Democrats don’t KNOW what the consequences are? They’ve been told by business people, over and over. It’s just what they do.

    Democrats are put in office by the labor unions and the trial attorneys. That’s where their funding comes from. When told to walk off a cliff, off the cliff these compliant vassals go.

    Contrary to my Republican allies, I do NOT think Democrat legislators are stupid. They are simply bought and paid for hired help. They are smart enough to know who pays for their elections, and act accordingly.

  4. Richard,

    Facts are stubborn things. The company run by Mr. Meyer is called Recreation Resource Management. They are a concessionaire operator of public park facilities. Which means when he left, the park operations simply transferred to another concessionaire. No jobs left. No investment left. No facilities were closed forever.

    But the even bigger misinformation in this post is your claim that business conditions drove Mr. Meyer out of California completely.

    In fact, RRM’s own web page shows they still operate nine separate park concessions in California, including nearby Mount Laguna.

    See for yourself.

    But we should never let facts get in the way of a good California-bashing story, right?

  5. Encinitas Dad, I stand corrected! Yes, Meyer fled Ventura County, not the entire state (an earlier article made that claim, but not the one posted above). My bad.

    And that’s it? That’s your response? No defense of the massive fees, bureaucratic delays, months of unemployment payments for seasonal jobs, pandemic lawsuits that his business (ALL California businesses) face?

    And BTW, I didn’t claim (as you indicate) that there was no park replacement concessionaire after Meyer’s company left Ventura County. Another straw man argument — one you excel at.

    Are you are a “slip and fall” attorney, profiting from our state’s lawsuit lottery? You seem pleased with (and defensive about) the fact that, as Meyers stated, over ten years his nationwide company found that “100% of [his nation company’s] lawsuits were in Ventura County (and therefore, California). “

  6. I love the bluster, Richard. The ‘is that all you got?’ spirit, after your entire premise and headline has been imploded.

    Of course things aren’t perfect–we can and should improve the business climate as long as the changes contemplated don’t unduly harm employees or the environment.

    But your case in point turned out to be a joke. The article was an advertisement for a relocation firm, which is why you were fooled–it was an intentionally misleading slant engineered to elicit the response you had.

    As to the “100% of lawsuits” claim, use some common sense. If this concessionaire runs 50 or 60 venues around the country, it’s not unusual to think that they might be sued for something, somewhere. If it’s true that “100 percent” of lawsuits were tied to one location, what are the chances that the absolute number of law suits is ONE? But putting that number in a “story” like this one would sound pretty weak.

    In the final analysis, this business owner made a decision to leave ~93% of his California business portfolio intact (including parks and cabins), which means your headline is ~93% false.

    Every business has locations that work, and locations that don’t, and some rotation is normal and healthy. In this case the business owner is a political ideologue who also runs several conservative blogs. He can tell whatever story he wants about his motives, but if the problems he identified were really accute and state-wide, he’d actually leave California like you thought he did.

    He didn’t. So we can assume things are not quite as awful as you’d like to believe.

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