L.A. law: Los Angeles takes the first step toward legalizing homebased businesses - California

Entrepreneur, Oct, 1996 by Cynthia E. Griffin

Alex Machi is in a quandary. On the one hand, he is savoring feelings of victory in the wake of a recent derision by the Los Angeles City Council to draft an ordinance legalizing homebased businesses. (Proponents expect it to be law by the time you read this.) On the other hand, he is appreciating the irony of possibly running one of the businesses prohibited under the City of Angels' new ordinance.

Machi, who owns a 4-year-old homebased video production company in West Hills, California, has in the last two years been very active in the battle to get city council members in the nation's second most populous city to give entrepreneurs the right to openly operate companies from home. In fact, Machi donated his time to create a video record of a public information workshop proponents put together on the Issue. "I cut three hours of footage down to a 20-minute version with the best moments of the event, including both pro and con viewpoints," he says. Then, to protect himself, Machi sent the video anonymously to all 15 Los Angeles City Council members.

At the council meeting, Machi watched tensely as city planning officials voiced strong reservation, politicians tacked on amendments and compromised on changes, and a parade of supporters and opponents tried to sway the council in their favor.

The 13-1 decision to send the legislation to the city attorney's office for drafting as an ordinance - which is the next step before approval - thrilled the videographer. But it also posed a major problem, because his type of company was on the ordinance's list of prohibited businesses.

According to the ordinance, recording and motion picture production studios cannot be operated in a home. In addition, all homebased businesses must be located inside the main residence.

"The intent of this provision is to exclude studios that do on-site photo shoots and larger-scale recording and film sessions, not someone sitting at home with two or three VCRs dubbing tape," explains Kenneth Bernstein, Planning and Transportation Deputy for Laura Chick, the councilwoman who aggressively championed legalization in the L.A. City Council.

Bernstein says adjustments have been made to clarify the language regarding this issue, as well as the question of whether doctors, dentists, ministers and the like can continue to maintain homebased offices.

* IT'S ABOUT TIME

A review of the nation's 10 most populous cities - Chicago, Dallas, Detroit, Houston, Los Angeles, New York, Philadelphia, Phoenix, San Antonio and San Diego - shows Los Angeles was the last to legalize home occupations. The battle to legalize homebased businesses in Los Angeles began 11 years ago and went through myriad public hearings, council committee hearings, planning department reviews and revisions.

The new ordinance includes a set of performance standards a business must meet, as well as a list of prohibited home occupations. If a business falls outside the standards, an entrepreneur can pay a fee to go before the zoning board and try to get a use variance to operate a business.

In addition to a regular business license, homebased entrepreneurs will need to pay a small annual fee, which will be used to enforce. compliance with the new law. The ordinance also includes a provision for an expedited process to shut down business owners who repeatedly violate the new law. The council will review the ordinance in six months and again in one year to see if any changes need to be made.

While the move by Los Angeles may seem like merely a local issue, advocates around the country say there is a national impact.

"With a city the size of Los Angeles, there's obviously going to be an impact around the country," says David Buchen, director of the Homebased Business Project at the University of Wisconsin, Whitewater. "Other cities will see this, and it will be a wake-up call on how important this issue is. The electronic revolution has been around a long time, and there are so many people working from home that it's imperative to set up an infrastructure so people can do it legally."

"Los Angeles is another arrow in the quiver of homebased business to point toward legitimization," says Ronald Wohl, state and government relations director of the American Association of Home-Based Businesses Inc. "This [ordinance in Los Angeles] means homebased businesses will file state and local taxes as a business. They can get a business license, register the name, and become a full-fledged business entitled to the same benefits and recognition in the community as other businesses."

Buchen echoes Wohl's sentiments on the advantages Los Angeles homebased entrepreneurs can now reap. "I see this as opening the door for entrepreneurs to be able to truly market themselves," he says. "They can now easily join the chamber of commerce and be out there promoting themselves."

For Los Angeles entrepreneur Diann Powell, a staunch and vocal advocate of legalizing homebased businesses, its a question of respect. "There's that whole issue of working according to the law,, she says. "If you're out there struggling trying to build a business, it's very demoralizing not to be legal. I think the fact that we're recognized now is the most important issue."