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When the Pacific Beach Shore Club registered for its business license, it told the city of San Diego it had three employees.
The booming bar and restaurant, just steps from the beach, actually has 70.
With two full bars, 21 televisions, and wild midweek goldfish races, the Shore Club may employ just three janitors to clean up afterward. There is no mistaking that this is a large beach ensemble, with plans to expand.
By underreporting the number of employees on its business tax certificate, the Shore Club saved $441 a year.
The beach area’s business improvement district, Discover Pacific Beach, also assesses local businesses based partly on employee counts. The improvement district is currently more than $20,000 in the red, making the annual $90 the Shore Club shortchanged it a sweet, if small, stash of cash.
The figure might be pocket change for most businesses but it puts owner Doug Sondomowicz in a tough spot.
He sits on the board of Discover Pacific Beach, and is specifically tasked with bringing about an increase in the economic well-being of residents, employees and businesses.
Last month we wrote about problems in the Discover Pacific Beach organization uncovered by a city audit, including the underreporting of employees in a number of local businesses.
Now, we’ve received the list of 23 businesses. Current and former board members’ businesses accounted for more than half of the six-fold increase in employees discovered by the audit.
Sondomowicz isn’t alone. The board’s president, Eric Lingenfelder, oversees Tavern by the Beach and Brewley’s Pint, which reported a total of 20 employees but actually have 69. Todd Brown’s Bub’s Dive Bar reported four but actually has 50; he’s the board’s former vice president.
In essence, by understating their employee counts, the three board members shorted the city out of business tax fees (a total of $1,133), and their own business improvement district out of assessments designed to help improve conditions in the district (a total of $450).
The total sums aren’t large, but they show how, up until last year, employee counts were entirely dependent on the honor system.
There are two ways in which underreporting of employees are detrimental to the city’s finances and to the improvement districts themselves.
Businesses pay fees to the city based on their employee counts. Small businesses with 12 employees or fewer pay a small flat rate of $34, while those with 13 or more pay a $125 flat fee plus an additional $5 per employee. Any employee working less than 10 hours weekly is not counted.
Businesses in improvement districts also assess themselves based partly on employee counts. The city auditor’s investigation, which was sparked by a whistleblower complaint, only looked into 23 of the more than 1,200 businesses included within Pacific Beach’s improvement district.
Bars by the beach are big business.
It’s no small feat getting small business owners to talk on the record in Pacific Beach.
Lingenfelder, Sondomowicz and Brown all didn’t respond to numerous attempts for comment.
Within the district, there’s a rift between alcohol and entertainment-related businesses and small businesses and residents who claim the community is struggling with high crime rates due to drunken fights and residential burglaries. Some business owners complain that bars and restaurants run the business district.
Discover Pacific Beach Executive Director Sara Berns says small businesses like retail don’t have the time, or the people resources to get involved in the improvement district. They’re in the thick of running their businesses daily and don’t have many employees to designate as representatives for community involvement.
This results in an abundance of representation in Discover Pacific Beach by bars, restaurants and resorts.
Crystal Pier Hotel owner Bill Allen says he’s simply too old now to deal with the absurdity going on in the improvement district, but he was willing to go on the record.
Allen, whose family has owned the hotel for half a century, says Pacific Beach has been going downhill for the past 10 years. He blames neighborhood bars, especially Shore Club, which is a block away from his hotel. Allen says bars in the area make enormous amounts of money by over-serving alcohol to patrons. Rowdy and inebriated, beachgoers have even caused Allen to have to comp rooms in his hotel because of guest complaints.
“They have no respect for the citizens in this community,” Allen said. “They’re the kind of people you just want to hit ‘delete’ and have them out of your life.”
Sandy Coronilla reports on local government and education for voiceofsandiego.org. She is on the Armen E. Keteyian Scholarship for Investigative Reporting. You can contact her directly at email@example.com or 619.325.0528.
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