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Apple Valley, Hesperia make list of 10 least expensive cities to do business
Jan Norman - Orange County Register  |  06-Oct-2010
     It’s official, once again, that California is an expensive place to do business. But two local communities, Apple Valley and Hesperia, made the list of the 10 least expensive cities to do business.
     The latest confirmation comes from the 2010 Kosmont-Rose Cost of Doing Business survey released Saturday. It is a project of Kosmont Companies o f Los Angeles and the Rose Institute of State and Local Government at Claremont Mc Kenna College.
    
A third of the 40 most expensive U.S. cities for business in the survey are in California while three of the 40 least expensive are in this state.
     “California cities continue to struggle with a sluggish economy and shaky finances, although many local governments have tried to cut costs and boost local business,” the survey says.
    
“As California raises its taxes, it continues to lose businesses to nearby Arizona, Colorado and Nevada,” the survey says. “Arizona and Colorado’s corporate income tax rates — 4.63 percent and   6.97 percent respectively — are much lower than California’s 8.84 percent. Nevada does not assess income tax, making that state even more attractive to businesses.
    
“Meanwhile, Arizona’s state sales tax rate is 5.6 percent, Colorado’s is 2.9 percent and Nevada’s is 6.85 percent, in contrast to California’s high 8.25 percent (cities tack on more).”
    
The survey concludes: “The high cost of doing business in California may encourage some businesses to move out of state.” 
    
Larry Kosmont, president of Kosmont Companies, an economic advisory firm, says, “With its high sales and income taxes, California remains an expensive state in which to do business. Just by being located in California, cities are at a ‘cost’ disadvantage right out of the gate.”
    
Orange County has one city on the most expensive California list — Rancho Santa Margarita — and one on the least expensive list for California — Costa Mesa.
    
The survey calls itself a “tie-breaker” for companies that are contemplating a move or
  expansion. The issues most important for them usually are such factors as quality of the labor force, housing prices and proximity to customers or suppliers. Once they narrow the list, they look at the cost of doing business in those cities.   
     Kosmont started 
doing the Cost of Doing Business survey 16 years ago. The survey uses a proprietary formula of state and local government fees, taxes and economic incentives to help companies compare cities in which they might relocate or expand.
     B
elieve it or not 
there are cities outside California that are platinum priced for businesses. Two of the biggest determinants of cost are business license fees and property taxes, the survey notes.
    
“In 18 of the 20 (most expensive cities on the 2010 list) a medium-sized retail business would pay over $10,000 a year in business license fees alone,” the survey says. “In eight of these cities, a medium-sized retail business would pay more than $100,000 a year in licensing fees.”   
    
The most expensive cities for business nationwide (again alphabetically) are: Akron, Ohio; Chicago, Ill.; Columbus, Ga.; Jersey City, N.J.;
  New York City; Newark, N.J.; Philadelphia, Pa.; Phoenix, Ariz.; Portland, Ore.; and San Francisco. Half of the least expensive cities nationwide are in Texas and all are west of the Mississippi River: Abilene, Texas; Austin, Texas; Cheyenne, Wyo.; Corpus Christi, Texas; Eugene, Ore.; Everett, Wash.; Fort Worth, Texas; Houston, Texas; Reno, Nev.; and Yakima, Wash.   
     “The 20 most expensive cities are distributed across every region of the country,” the survey says. “Also, 16 of the 20 least expensive cities are located in states that do not impose income tax, and three are located in states that do not impose sales tax.”
 


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