L.A. Controller Calls on City to Modernize Police Permits for Businesses

Posted on April 12, 2017 at 2

Audit by City Controller Galperin finds many of the nearly 60 special permit categories outdated and cumbersome

Los Angeles – City Controller Ron Galperin released an audit today assessing L.A.’s requirement for 59 different commercial police permits to operate particular businesses such as skating rinks, antique stores, bowling alleys, dance academies and junk collectors. Currently, each of these businesses require background checks, fingerprints and an annual fee to operate in the City, in addition to L.A.’s general business tax registration and certificate.

The audit noted that 49 of the permit categories were created before 1970 and that there has been no systematic process to review them. Moreover, Galperin’s audit found, enforcement has been inconsistent, with many business categories having few if any registrants.

“We need to better align our permitting requirements with the realities of today’s businesses and with 21st century policing -- which will mean getting rid of some categories while considering some new ones,” Controller Galperin said. “The goal should be to focus our attention and resources on the businesses that pose the most risk to their customers and to the public, in order to promote public safety.”

Galperin called on the Police Commission and the City Council to evaluate whether each of the required permits, in fact, meaningfully benefit public safety. The Controller also recommended that the Police Commission and the Office of Finance streamline the permitting process by making it possible for business owners to apply for police permits as they register for City business taxes.

Police Commission Executive Director Richard Tefank, after reviewing the audit and conferring with Galperin, agreed to report to the City Council on the history and public-safety rationale for each category of business required to have the permits. The Commission Investigation Division also will evaluate whether to eliminate the requirement for some types of businesses. Tefank pledged to work toward posting permit information online for the public, while allowing permit holders to apply, renew and pay online.

“Police Commission and Commission Investigation Division staff are undertaking a review of how to make the permitting process as efficient as possible for businesses and individuals we regulate, while at the same time determining whether we need to require all of the current 59 categories of permits,” Executive Director Tefank said. “We’re looking at how best to meet our goal of public safety without unduly burdening businesses and individuals. We appreciate Controller Ron Galperin’s review of this issue and look forward to working with him on meeting this goal.”

Commission records show that 5,603 businesses have valid police permits for the 59 categories as of April 6. The categories include dance halls, rummage vendors, firearms dealers, cyber cafes, figure studios, key duplicators and massage parlors.

The Los Angeles Municipal Code requires certain types of businesses to obtain police permits, which allow officers to inspect properties without a warrant. If officers deem a business a nuisance, the Police Commission may call the owners before a review panel that can order the business closed.

Many of the required permits have an obvious connection to deterring crime. For example, permits are required of pawn shops to prevent trafficking in stolen property, and of valets to stop auto theft.

Galperin’s audit found spotty compliance among several categories of businesses. As many as 62 percent of secondhand dealers in the City lack valid police permits, and a vast number of pawn shops, antique shops, movie theaters, and massage businesses are unpermitted. At the time of the audit, there were no registrations for cyber cafes or escort bureaus. Businesses such as family billiard rooms and non-adult entertainment theaters had only one registrant each. All but two of the permit categories require owners to undergo criminal background checks, fingerprinting and permits typically cost more than $200 a year to renew.

Operators of movie theaters are required to obtain police permits that cost $267 initially and $231 a year to renew. Yet only 16 theaters in Los Angeles had valid permits in 2015, Galperin’s auditors found, down from 41 a decade earlier. As of April 2017, the number of permits for movie theaters was 21, commission data show. A cursory directory search of theaters in L.A., however, suggests multitudes more are operating.

The National Association of Theatre Owners of CA/NV, whose L.A.-based members have struggled to comply with permit requirements that can take as long as six months, welcomed Galperin’s review and recommendations for reforms, said Milt Moritz, the group’s president and chief executive. The process can involve multiple appointments in different locations as well as notarized signatures, copies of leases, building plans and live scan fingerprinting.

“For too long, our members have struggled with complying with the city's onerous regulations in obtaining the necessary permits,” Moritz said. “We're pleased that Controller Ron Galperin is looking into the issue and hopeful that his audit produces reforms that will relieve businesses from the bureaucratic maze our members have to endure in order to comply.”

The audit compared Office of Finance tax registration and permit fee data to the Police Commission-issued permits. Galperin said the two agencies should share information to increase compliance.

The audit recommended that the Police Commission:

  • assess which permits are justified for public safety and periodically report their findings to City Council. When there is no justification, they should recommend repeal.

  • better track and gather data to inform which businesses pose a risk, and if any new permit types need to be created.

  • work with the Office of Finance to identify non-compliant businesses through better tracking. Further, Finance should request that City Council authorize tax compliance officers to issue administrative citations.

  • re-evaluate the justification for background checks, and when needed, require Subsequent Arrest Notifications and the federal level of service.

  • work with the Office of Finance to reform and streamline the process of issuing and ensuring police permit compliance.

  • explore how to make permit information available to detectives in the field, not just the office.

The audit noted that in 2015, 4,100 police permits were issued to 2,200 businesses and nearly 2,300 permits were issued to individual employees of permitted businesses. For the year ending June 30, the City is projected to collect $15.8 million in fees from new permit and annual renewal fees that range from $87 to $864 and $87 to $231, respectively. The audit excluded fees for alarm systems and false burglar alarms, which are the largest sources of permit revenue, and several other categories.