FEBRUARY 24, 2014 @ 12:05AM

Business Examiner

Tacoma rates among the most expensive cities to do business in the western United States, according to a study released Feb. 11, while nearby Kent and Federal Way are among the least.

The 19th annual Kosmont-Rose Institute Cost of Doing Business Survey Report, released by Claremont McKenna College in Claremont, Calif., compares the impact of municipal governments on business costs in California, along with eight other states many companies view as possible alternatives, including Washington. Tacoma, along with Seattle to the north, rated in the highest cost category, joining cities like Denver, Los Angeles, Phoenix, Portland and San Francisco.

Both Washington cities were among the study’s 20 most expensive, joined by Bellingham in the state.

“Tacoma tends to be relatively high compared to the other 304 cities surveyed in three key categories — sales tax, retail business license fee and property tax rate,” explained Larry Kosmont of Los Angeles-based Kosmont Companies, which gathered data for the study. “Tacoma’s high enough in each of those categories to place in the top 20.

“Now, the cities in those top 20, many of them like Tacoma — and Seattle, which is right there as one of the most expensive cities — are still attractive to businesses,” explained Kosmont. “They do provide access to financial markets. They have concentrated economic areas, including manufacturing and distribution, as well as regional and international trade. But they are on the high end in [the sense that] you’re going to have to pay to be there. That means, if you’re locating your business, you’re going to have a specific reason to be in those cities, whether it’s distribution, customer base, demographics, whatever that might be.”

Conversely, Federal Way and Kent ranked among the least expensive in the West, joining Everett, Spokane and Yakima as Washington cities on the list.

“What do these two bring to the table? Well, they have almost no business license tax,” Kosmont said. “In other words, for a business in Tacoma that might spend $15,000-plus a year [on licensing], that same business in Kent would spend $100. In Federal Way, they’d spend $50.

“The sales tax is the same at 9.5 percent. The property tax rate is within a quarter of a point of Tacoma and Seattle … The very inexpensive business license tax is the key to both places [Kent and Federal Way], if you will.”

Other cities the study deemed among the least expensive in the West include Dallas and Las Vegas.

Article Link: http://www.businessexaminer.com/blog/February-2014/Tacoma-among-most-expensive-for-business-in-West/