Taxes are usually the heart of the discussion when people talk about the bad business climate in California. And certainly their taxes are just insanely high. But for folks like me, an even bigger barrier is the regulatory environment. We are closing several operations in California at the end of this year mainly because we are just exhausted with the compliance costs and regulatory barriers to expansion. In Ventura County, for example, we have a camping operation that has never made money because it is under-scale. We have the capital and desire to expand it, but it has just proven impossible to do so.
A big reason for this is the regulation in California and in Ventura County. We once had to get something like 7 permits just to remove a dangerous and dilapidated deck. We added a 500 gallon fuel tank for fueling boats (to eliminate the unsafe practice of driving in and out of town with about 100 5-gallon fuel containers) and it took over 3-years of trekking to multiple county and state offices to get it permitted. We thus despaired of trying to get a campground expansion approved. Approximately the same expansion that cost us just under a million dollars in Alabama several years ago was going to cost over $5 million and Ventura County, and the County was still piling on requirements when we gave up. And this is even before we fart with crazy California break laws and other nuttiness.
I have often told folks that I would love to see a liberal defender of all this regulatory overreach try to construct and open a restaurant in Ventura County. It would be fascinating to watch. (All this musing was touched off by this article on underground restaurants that try to sidestep this regulatory cost and mess). We are a service business and California still has a lot of money, so we still operate in California. But I continue to wonder why any company, like a manufacturer, remains in California. Sell there yes, but produce anything you can out of state and ship it in. Even as a service business we do a bit of this, no longer stick-building anything but having all our buildings, cabins, stores, etc built in Arizona as modular buildings and then shipped to California. Even our labor force is partially "imported", as we hire folks who live in their RV's to come from all over the country to live and work at our campgrounds.
As I read the other day, if Silicon Valley were not already in California, would anyone in their right mind put it there?
Postscript: One other story: California's regulatory environment has caused a real shift in the culture as well. At one location that we are closing this year, a local attorney has regular dinner meetings with groups of our employees to brainstorm among the group to see if they can come up with something to sue us over.