Naked Juice Founder Now Tackling World of Wireless By SLAV KANDYBA Staff Reporter The former founder of Naked Juice has now set his sights on pioneering a huge segment of the wireless market. On Jan. 19, David J. Bleeden, president and CEO of Strathmore Investments, moved his company Wildcat Communications Group to a new 3,000-square-foot headquarters in Agoura Hills as part of a plan to be the “No. 1 brand in mobile communications products.” He wants to provide one-stop-shopping where consumers can get a wide range of products and services for all brands of cell phones. Included are high-end products with Bluetooth and WiFi capabilities but also novelty items such as color-flashing faceplates. He also eventually wants to make his own products. The company’s strategy will be Web driven. His Beverly Hills-based Strathmore Investments has acquired nine total Web sites which have more than one million users every month. He is putting an emphasis on multi-channel distribution, with consumers being one channel and business-to-business another. While it already has an office in Torrance, Wildcat will move its executives over to the newly-leased Agoura Hills office, where it will have five to 10 people total in sales, customer service, shipping and marketing; it has plans to add more eventually. The lease is for two years with an option for another two. Bleeden, who founded Naked Juice with a roommate at Venice Beach in the 1980s, is trying to carve out a niche for his new company by doing everything in the mobile communications market, and doing it well. In the fast-growing wireless communication industry, he said he sees “a lack of universality” and wants to do something about it. Lofty goals? Ben Bajarin, a wireless industry analyst at Silicon Valley-based Creative Strategies, thinks so but also adds it’s doable. He said, however, that consumers tend not to go to one place to get all of a particular type of product, unless it is something of a “community,” as Bajarin puts it. Such a Web site would offer something new and interesting to people that no one else provides. “What generally happens is people look at sites dedicated to specific phones,” he said. Short production cycles But that’s not all that stands in the way of Wildcat becoming to wireless what Microsoft is to PCs. Production time is becoming so efficient, it’s hard to keep up with supplying all parts to all models of cell phones being made. Bajarin said shorter product cycles result in up to three to five models released per year. A phone can be manufactured in three months after initial design. Bleeden’s competitors will be people like Sheldon Dubow, who owns Woodland Hills-based Discount Cellular Accessories, a family-owned firm that opened its doors in 1996 and has built its business around Nextel-brand phones, service and accessories. “We have a constituency of customers we worked hard to get,” he said. As a veteran of the burgeoning wireless industry, Dubow came out of retirement to start Discount. He said Bleeden may have a difficult time of it. “When you become a jack-of-all-trades without (specializing in anything), It’s a very difficult,” he said. “I think companies need to specialize.” Dubow’s company, like Bleeden’s, has a Web site set up to sell phones and accessories. But Bleeden’s latest venture is indicative of his entrepreneurial vision, which led him to be a pioneer in the bottled juice industry. Bleeden, now 42, was a graduate from UC San Diego playing gigs in a band with his roommate in Venice Beach when they founded Naked Juice, a freshly bottled juice company, to make extra money while playing in a band. Eventually they sold it to Chiquita. Bleeden then joined RhinoTek Computer Products, which makes heavy-duty computer products, and helped boost its sales from $25 to $45 million. He left in August 2003 to start his investment group, Strathmore, and right away closed a deal to buy privately-owned Amco Cellular Products. He renamed it Wildcat Communications Group, and bought Dallas-based G-Tel Wireless, a popular-brand wireless accessory and peripheral company. While Bleeden sees opportunity in the “huge market” he is entering with Wildcat Communications, analyst Bajarin said it will be a challenge. “It’s got to be marketed on what the vision is,” Bajarin said. “If you can tie all that in and market it in one side, you’re taking steps in the right direction.”

Announcement of Sale Stuns Staff at Encino-Tarzana By JACQUELINE FOX Staff Reporter The announcement by Tenet Healthcare Corp. that it had decided to put its only Valley hospital, Encino-Tarzana Regional Medical Center up for sale alongside 18 of its other California hospitals cut like a knife at the 236-bed facility. “It was a big shock to all of us, although we did know that there needed to be some changes at Tenant,” said local attorney Lee Alpert, who has served as the hospital’s chairman of its governing board of directors for nearly two decades. “But being sold was not something that was on our radar screen.” Troubled Santa Barbara-based Tenet has said it made the decision to unload the 19 facilities because it can’t afford to pay the roughly $1.6 million it needs to complete state mandated seismic upgrades, a requirement stemming from the damage done to Valley hospitals during the 1994 Northridge Earthquake. Unlike other hospitals across the Valley, Encino-Tarzana was not damaged during the quake, and, as a result, Tenet is not eligible to receive any assistance from the Federal Emergency Management Agency. Dale Surowitz, Chief Executive Officer at Encino-Tarzana said he spent much of the last week in meetings with administrators, physicians and other staffers to discuss the changes and assure them that closing the hospital was not an option at this point. “The issue we are focusing on now is continuing with our core services,” said Surowitz. “We’ve told our employees that we are going to continue to provide the outstanding level of services that we always have.” But the sale announcement has frozen Encino-Tarzana’s long-term plans for growth and addressing its retrofit requirements. Although the hospital had been weighing out several options, it was leaning toward a master plan for development that would ultimately combine the two campuses. “Obviously that was one of the scenarios we were looking at as a way to address the retrofits, but now we will have to wait until we have a buyer,” Surowitz said. Encino-Tarzana has a combined total of 236 beds and an 80 percent occupancy rate. The Encino campus was built in 1954 and Tarzana was built in 1973. Combined, the two campuses have 1,650 employees. Tenet says it intends to hold on to 17 of its other California hospitals, which, according to David Langness, the company’s director of communications, will only cost roughly $300 million to upgrade. “You can see that that is a huge difference,” Langness said. Restructuring plan Langness said the push to sell the hospitals has been in place for several months as part of an overall restructuring plan for the cash-strapped company that has been plagued by federal investigations into allegedly performing unnecessary procedures and overcharging the state’s Medicare program. Those allegations culminated in the 2003 departure of Tenet’s Chief Executive Officer, Jeffrey C. Barbakow, who is reported to have left the company with an agreement to receive three years of severance payments equal to his annual salary, plus bonuses and stock options. Langness said he believed the market for Tenet’s facilities was strong and that the company had received several phone calls the day of the announcement from potential buyers for many of its facilities, including some of its own physicians. “Doctors do this all the time,” said Langness, who declined to say if any doctors from Encino-Tarzana had expressed interest in buying that facility. Langness said the company’s goal was to sell all 19 hospitals by the end of the year and that until buyers come forward, the goal was to continue the current level of service and care. “We are convinced these hospitals will continue to be viable to operate normally,” said Langness. “We just sold off 12 hospitals across the country. So we certainly know what we’re doing.” Tenet officials have repeatedly said that non-profit hospital groups would be ideal candidate buyers because they qualify for bonds and other tax incentives that for-profit hospital chains do not, and, as such, could withstand the price tag of a facility in need of millions of dollars of mandated renovation.

Hahn Visits Chamber Alliance Mayor James Hahn capped off a week of scattered appearances across the San Fernando Valley on Jan. 30 by swearing in the new chairman of the United Chambers of Commerce of the San Fernando Valley and the organization’s 2004 board of directors. Hahn took a few moments to address the UCC, outlining his view of the city’s progress on crime and improvements in the delivery of services across the Valley. “Over the years we’ve all heard people say you can’t bring down crime until the economy improves,” Hahn said. “I believe the opposite is true. The economy won’t improve unless crime is reduced.” Hahn told the UCC that homicides in 2003 were down 22 percent citywide and 24 percent in the Valley, and he expects a similar decrease in 2004. Hahn also highlighted the city’s efforts to continue to streamline procedures for economic development projects, and he spoke of his efforts to make city government more responsive and accessible. He said there are now 26 certified neighborhood councils in the Valley. Joel Simon, an attorney and partner with Encino-based Alperstein, Simon Gillin & Scott LLP, was elected to a two-year term, replacing Bill Powers. Hahn’s appearance at the event had not been pre-scheduled. The ceremony also drew several members of the Los Angeles City Council and state assembly members. Jacqueline Fox

Capitol Punishment: Price Fixing in the Public Sector Guest Column by Gregory N. Lippe The U.S. economic system of “free enterprise” which dates back to the birth of our nation is envied throughout the world because it works extremely well providing economic strength, assuring all citizens of a continuous supply of needed goods and services and allowing a fair profit to business owners. The system operates according to five main principles: the freedom to choose our businesses, the right to private property, the profit motive, competition and consumer sovereignty. In general, the concept of “free enterprise” does not apply to government entities, however, I believe that two of the principles of “free enterprise” are applicable, those of consumer sovereignty, the freedom to purchase from one entity vs. another, and competition. Because of the pressure of competition, companies must constantly try to provide the best services and create the best products at the lowest possible prices. Since government entities purchase in large quantities, the principle of consumer sovereignty would enable them to take advantage of the competition among vendors and thus contain costs. Also, because of the legislature’s propensity to increase benefits to government employees without regard for affordability and without being subject to a profit motive, the achievement of cost containment is more likely to be attained by utilizing outside contractors in a free competitive environment. Although government entities do not operate with a profit motive, it is government’s responsibility to avoid interference with the private sector’s ability to generate profits. In this regard, it is also government’s responsibility to contain its costs to enable lower taxes on citizens and their businesses thereby minimizing interference in the free enterprise system’s ability to generate profits. When government fails to discharge this responsibility effectively, a negative business environment is created resulting in businesses closing or relocating and jobs being lost. Also, when businesses close or relocate, the tax base shrinks causing a reduction in government revenues resulting in decreased services or increased taxes to those businesses that remain. This perpetuates the negative business environment. When consumer sovereignty is taken away from government entities by legislation that restricts competition, the opportunity to contain costs is threatened or lost by government’s interference with “free enterprise.” The system is also severely impeded when the legislation prevents private sector businesses from qualifying to perform a contract for services unless they maintain a cost level equal to the government entities’ internal costs. The private companies are unable to earn a profit and must forego competing for the contract. This kills competition and is tantamount to “price fixing,” a practice that restrains trade and is illegal for companies to utilize in the private sector. Why should the legislature be able to employ a practice that would be illegal if employed by the business community? This practice forces companies out of business and causes a loss of jobs. SB 1419 authored by Sen. Richard Alarcon is a prime example of legislation that restricts competition and thereby takes consumer sovereignty away from government entities. It was referred to in Gov. Schwarzenegger’s “State of the State” address as legislation that needs to be repealed. This bill, enacted in 2002, restricts the ability of school and community college districts to utilize outside contractors to achieve cost savings. It provides a list of conditions under which contracting is permissible. Some of these conditions include: (1) Proposals to contract out work shall be eligible for approval if the contractor’s wages are at the industry’s level and do not undercut school district pay rates, (2) The contract does not cause the displacement of school district employees, (3) the potential economic advantage of contracting is not outweighed by the public’s interest in having a particular function performed directly by the school district, (4) The services contracted are not available within the district, cannot be performed satisfactorily by school district employees, or are of such a highly specialized or technical nature that the necessary expert knowledge, experience, and ability are not available through the school district, (5) The contract is for new school district functions and the legislature has specifically mandated or authorized the performance of the work by independent contractors. Estimates provided by the Coalition for Local Control of School Spending, whose members include the California School Boards Association, the California Association of School Business Officials, The Association of California School Administrators, School Services of California, Inc., Community College League of California and several hundred local education leaders throughout California, indicate that repealing SB 1419 would allow public schools to save up to $300 million every year without a single budget or service cutback. Additionally, Gov. Schwarzenegger stated in his address: “Because of SB 1419, many school districts are spending between 10 and 40 percent more than necessary to provide non-instructional services.” Based on the percentages of spending for non-instructional services indicated in the governor’s address, it would appear that the elimination of SB 1419 could help to make significant funds available for instructional services and still allow for a potential reduction in taxes or a reduction in the budget deficit. We must urge our legislators to repeal SB 1419 and to avoid passing future legislation of this type. -Voting information regarding SB 1419: Valley legislators voting for bill: Senate, Alarcon, Kuehl; Assembly, Cardenas, Frommer, Hertzberg, Koretz, Pavley. Valley legislators voting against bill: Senate, Scott, Margett, McClintock; Assembly, Richman, Strickland. Gregory N. Lippe, CPA, is managing partner of the Woodland Hills-based CPA firm of Lever, Lippe, Hellie & Russell LLP (LLHR) and a director of the Valley Industry and Commerce Association (VICA).

Ambitious Venue Proposal Gets Little Public Support By JACQUELINE FOX Staff Reporter Businessman Mark Steele is shopping a plan to build an arena-style sports and entertainment center in North Hollywood, but so far, there is scant support for his vision, at least publicly. The $100-million development plan would require tremendous financial wherewithal and early commitments from potential tenants who would perform, play and exhibit at the proposed 9,000-seat arena. But mostly, Steele’s plan may be hamstrung by its location. It’s “still in the desert,” said Zane Segal, project director for Zane Segal Properties in Houston and one of an Urban Land Institute team that reviewed the proposal, referring to the proposed North Hollywood location. Segal and a team of designers and experts from around the country were asked to come up with independent findings concerning North Hollywood’s redevelopment, and their concerns about the location of such a stadium are likely to be a blow to Steele because the city has said it plans to rely heavily on the panel’s recommendations. Steele, who has formed Valley Sports Authority LLC to push the proposal forward, said he chose the North Hollywood location because of the available MTA property up for grabs there. The complex, which he is calling The Oasis, would be located next to the North Hollywood Metro Station on land owned by the MTA. According to Steele, the owners of the Long Beach Ice Dogs hockey team have already signed up for the project, and he has had positive discussions with a number of potential corporate sponsors, developers and financiers. Steele said the project would bring in much needed revenue for the cash-strapped MTA through land rents, increased ridership and parking lot revenues. “What we are trying to do is say ‘Look we have corporate sponsorships, we have the business support, and we have sponsorship interest,” said Steele. But some of the city officials and others say that, while the project deserves consideration, it would be extremely difficult to pull off. “Mark Steele’s group just does not have the financial backing or the professional team we are talking about for getting this kind of a deal up and running,” said Robert “Bud” Ovrom, chief director of the Community Redevelopment Agency of Los Angeles. Nor is the MTA ready to jump on the bandwagon, at least publicly. Steele said he has been offered support for the project by MTA chief Roger Snoble, but Snoble declined comment on the plan for this story. ULI Gives Recommendations A panel of experts from the Urban Land Institute last week delivered a set of recommendations for redevelopment of North Hollywood. Among the suggestions, the panel said the city should take a “Main Street” approach rather than build one large town center development, and it should promote adequate public policies and strategies to ensure the development of mixed-use housing projects, including protecting the existing arts district uses. The panel urged the city to support the existing businesses in the area, capitalize on the transit hubs and link the distinct areas of North Hollywood through attractive pedestrian walkways. The ULI team also said North Hollywood could support a world animation center. The preliminary findings of the study, which was commissioned by the Metropolitan Transportation Authority and the Community Redevelopment Agency, were delivered at a public meeting held at the Beverly Garland Holiday Inn in North Hollywood on Jan. 30. The full report is expected to be released in two months.

VALLEY BRIEFS Big Dog Walking Big Dog Holdings Inc. has acquired beleaguered The Walking Co. in a deal worth more than $15 million. The deal, for cash, stock and assumption of debt will give Big Dog, a Santa Barbara-based maker and retailer of novelty active wear and accessories, a new product line and greatly expand its retail holdings. Chatsworth-based The Walking Co., with sales of $65 million, operates more than 70 retail stores. The company specializes in high-end footwear brands such as Ecco, Mephisto and Birkenstock. The Walking Co. emerged from bankruptcy last summer after shedding about one-third of its retail stores. Big Dog, which is named for its signature apparel motif, a Saint Bernard breed, has seen its sales languish recently. In announcing its preliminary year-end financials, Big Dog said its net sales for the year ended Dec. 31 decreased 4.6 percent to $103.8 million. Hertzberg to Chair LAEDC The Los Angeles Economic Development Corp. (LAEDC) has elected former Assembly Speaker Robert Hertzberg chairman of its board of directors. Hertzberg succeeds Matt Toledo, publisher of the Los Angeles Business Journal (a sister publication to the San Fernando Valley Business Journal), whose one-year term is due to expire on March 31. Hertzberg, who served as California State Assembly Speaker from 2000 to 2002, is currently a partner in the government relations practice of Mayer, Brown, Rowe & Maw. He has also served as a consultant to the LAEDC. Pacific Crest Acquisition Approved The planned acquisition of Pacific Crest Capital Inc. by Pacific Capital Bancorp has received the needed regulatory approvals and will be presented to shareholders for their approval this week. If shareholders give the transaction a green light, Pacific Capital will acquire Pacific Crest, one of the Valley’s only remaining independent banks, in an all cash transaction valued at $135.8 million. Agoura Hills-based Pacific Crest has three branches in Beverly Hills, Encino and San Diego. Santa Barbara-based Pacific Capital operates a number of local banks along the Central Coast totaling 41 branches. McClintock Recognized State Senator Tom McClintock received the California Legislator of the Year award from AeA, a trade association representing the high-tech industry. Woodland Hills-based AeA recognizes legislators for contributions to the success of the high tech industry. NTS Growing National Technical Systems, Inc., based in Calabasas, said it will acquire privately-held DTI Holdings LLC, headquartered in Rustburg, Va. NTS, a provider of testing services to a range of industries from aerospace and defense to IT acquired DTI for a combination of cash and common stock. “The DTI acquisition differentiates NTS as the only commercial company able to offer the Navy physical tests to qualify products for deployment on Naval vessels,” said NTS Chairman and CEO Jack Lin. Interlink Raises Expectations Thanks to improved performance from its electronic transactions segment, Camarillo-based Interlink Electronics, Inc., a manufacturer of information technology devices, said its revenues for the quarter ended Dec. 31 are expected to grow by 10 percent from the $7.8 million reported in the company’s third quarter. Power-One Reports Loss Power-One Inc., a Camarillo-based telecommunications maker, lost $10.4 million or $0.12 per diluted share on sales of $67 million in the fourth quarter ended Dec. 31. That compares with net income of $5.1 million on sales of $66 million for the like quarter of 2002. The company said its performance was impacted by investment write-down and restructuring costs of $8.8 million or about $0.10 per share. Although Power-One expects to record a loss in the first quarter of 2004 as well, the company said it expects to return to profitability later in the year. For the full year ended Dec. 31, Power-One lost $18.2 million or $0.22 per share, compared to a loss of $211 million or $2.62 per share for the same period last year. Pixar and Disney Part Ways Pixar announced that it plans to end its partnership with The Walt Disney Co. following delivery of two more animated features in 2004 and 2005. Tom Staggs, Disney senior executive vice president and CFO, said the company could not financially justify the terms of Pixar’s deal. Disney plans to continue to grow successful franchises like “Toy Story,” and “Finding Nemo,” which were created through the partnership. In addition, the company maintains the right to exploit all the characters created through the partnership in its theme parks and consumer products units.

Renovations Signal Improved Outlook for Hotel Industry BY JACQUELINE FOX Staff Reporter Corporate travel may still be limping toward pre-911 levels but occupancy and average daily room rates for 2003, coupled with projections going forward indicate that the Valley’s hotel industry has finally turned a corner. “The industry is definitely getting healthy again,” said Bruce Baltin, senior vice president of PKF Consulting. According to Baltin the Valley’s hotel sector ended 2003 with an average room occupancy rate of 68 percent, up from 66 percent in 2002. He said the industry is projecting occupancy rates across the Valley to climb to 70 percent in 2004. Leisure travel, said Baltin, has remained relatively stable the last two years, helping to offset the decline in corporate travel. But hotels have also had to bite the bullet and lower room rates over the last three years in order to compensate for the downturn. Those rates are now coming back in line with pre-911 levels, which dipped by 7.9 percent in 2001. Rates were only down by 4.5 percent in 2002 and improved to just a -1.8 percent in 2003. “No one is saying it’s going to be a boom, but we’ve definitely bottomed out and we are back on the other side,” said Baltin. According to PKF’s 2004 Southern California Lodging Forecast, room rates are projected to increase by another 2.2 percent in 2004, up to about $111 from $109 in 2003. The turnaround seems to be going hand-in-hand with scattered renovation projects now underway and a couple of Valley hotel sales in 2003. The Warner Center Marriott Hotel in Woodland Hills, for example, which was bought last year by Stone Levy LLC, is nearing completion of a significant overhaul of the majority of its public spaces, including a new lobby, bar and restaurant, and is reported to be remodeling one of its entire floors that was previously a conference and meeting space to make way for 13 more guest rooms. The hotel, which now has 476 rooms and 10 suites, has also added a full-service Starbucks coffee bar and five new meeting rooms. The renovations, according to the hotel’s General Manager, Victor Mills, will cost in excess of $3 million. “These are exciting times and we are happy to be on the verge of completing these much-needed renovations,” said Mills. “Part of what we are also seeing in addition to a return to corporate travel, is, after three years of slow activity in the industry, people are now putting long-deferred money into properties and completing long-haul renovations,” said Baltin. Mills said the because his hotel does not rely on traditional tourists markets, it has always managed to stay about 8 percent higher than average occupancy rates and he’s projecting increases this year of roughly 5 percent. Across the Valley, the Radisson Valley Center Hotel has changed hands,and names,and is putting the finishing touches on a compete renovation of the entire hotel that, when finished, will take the room count from 179 to about 203. The hotel is now a Courtyard by Marriott, and, says Chris Bold, who came on as general manager in spring of 2003, aims to offer a hip new option for both business and leisure travelers. According to Bold, the hotel, bought by Los Angeles-based Wolff DiNapoli, whose portfolio includes the Fairmont hotels in Santa Monica and San Francisco, was nearly demolished in the change over April 1. When construction is complete it will feature 205 guest rooms, up from 179 under the previous ownership, 19 new suites, a 300-square foot “business library,” complimentary high-speed Internet access in most public meeting spaces, a new restaurant that replaces the former Windows Bar and Grill, and a new lounge with an onyx backdrop and 42-inch plasma screen TV. “We’ve pretty much gutted the entire hotel and believe me, it wasn’t easy because we’ve been open through the entire renovation process,” said Bold, a professional chef who has taken charge of the restaurant (no new name yet) menu, a blend of what he calls “contemporary fusion.” Occupancy levels were at 70 percent upon the start of the renovations, now down to about 30, he said. But the company felt it was creating such a high-end product, it decided the falloff, if only temporary, was worth it. “This is going to be one rockin’ hotel,” said Bold. The facility is expected to have 83 of its new rooms open by the end of this week. Once the renovations are complete in April average daily rates will start at around $139, up from the former rate of $109, Bold said. Corporate rates will start at $159 during the week and $139 on weekends. “We’re in the homeward stretch,” said Bold.

Public Scrutiny of Proposed Tax Revisions Begins By JACQUELINE FOX Staff Writer If the first public hearing on a report released in January outlining recommendations for reforming the city’s Byzantine tax code is any indication of things to come, expect a lengthy and complicated debate over the merits of the proposed reforms or whether they are even necessary. Representatives from the city’s Business Tax Advisory Committee (BTAC), commissioned five years ago to study alternatives to the city’s tax system, convened downtown Jan. 26 to discuss the findings of the draft report, the result of a $420,000, two-year study conducted by Fresno-based MBIA MuniServices Co. MBIA has proposed a two-tiered tax system that would levy businesses on their net incomes at a flat rate of $3.50 per $1,000, instead of their gross receipts, which taxes every business, big and small, on their gross revenues, regardless of whether they make a profit, and sometimes more than once through what are known as pass-thru taxes on subcontracting revenues. But the MBIA report also recommends the tax be based on the square footage of a business operation, beginning at 2 cents a square foot for some industries, such as grocery stores, doctors and auto dealerships, but going up as high as 30 cents for others, such as restaurants, apparel manufacturers and commercial landlords. Because the city nets a whopping $300 million annually through the gross receipts tax, MBIA’s report was compiled under a scenario of revenue neutrality, hence, there are winners and losers. And it’s expected that many from the business community on both sides are preparing to lodge a laundry list of complaints and concerns about the recommended changes at the next BTAC meeting set for Feb. 2. The first meeting, however, although public, was largely comprised of BTAC members and city officials, including Jack Walker, a retired tax attorney and committee member who says the current MBIA recommendations appear to involve huge risks and costs and fail to offer a compelling reason for a change in the city’s code, a move that would require voter approval. “There are always huge risks and costs involved when you talk about changing a tax system,” said Walker, who retired from the Los Angeles law firm of Latham & Watkins in January. “And on their face, I just don’t see in these recommendations a compelling need to do that. I also think the issue here is that it shouldn’t be that they (the recommendations) are only somewhat better, but that they should be hugely better before you go down that road of asking for changes in the law and making those expenses.” Walker also said a system based on net receipts and square footage appears now to be even more complicated than the current one based on gross receipts. More scrutiny But more important, he said, was the propensity for red flags under the net tax system, because it would open up businesses to more scrutiny through likely increases in itemized deductions. “I’ve been practicing tax law for more than 30 years and usually when you’re fighting with the Internal Revenue Service, you’re talking about deductions,” said Walker. “I can just see a whole new world of uncertainty and litigation coming out of it. I recognize that the existing system is patchy, but you only have to calculate one number. And right now I’m just not convinced that this report offers up anything better.” But other BTAC members disagree, sighting the need for a change in the tax code in order to both retain existing businesses and draw new ones in. They caution that this meeting was the first of many planned public hearings that will give both business leaders and community organizations a chance to weigh in with both their comments and their criticisms. “With all due respect, there is a huge compelling reason for changing the law,” said Marvin Selter, BTAC co-chair. “The overriding reason for changing the law is, in my opinion, to provide an incentive for businesses to stay here and to come here,” said Selter. Once BTAC has compiled further recommendations for changes it will submit a final report to the mayor’s office. The city council and the office of finance would then review the report and determine whether a ballot measure for altering the tax code should go before the voters in 2005. Reader Questions Sought In an attempt to provide a forum for thorough discussion of the issue, the Business Journal plans to publish a regular section devoted to the proposed revision of the city’s business tax system. In the section to appear in upcoming editions, Marvin Selter, Valley businessman and Business Tax Advisory Committee member, will answer questions submitted by business owners and concerned citizens concerning proposed changes in the tax system. Please submit questions to Business Journal Editor Jason Schaff by e-mail at [email protected] or fax to (818) 676-1747.