Porter Ranch gas leak begins taking big toll on small business

PORTER RANCH, California — On a recent afternoon at King TaeKwonDo, in one of the many shopping centers dotting this sprawling suburb north of Los Angeles, only seven young children were attending the martial arts class. Just two months ago, there were 20.

And in December and January, when enrollment usually soars as children cash in gift cards they received at Christmas, no one signed up.

Sarah Tall, the owner of the three-and-a-half-year-old business, pulls out a letter from her landlord and breaks down in tears. She faces eviction if she doesn’t pay the rent and late fees.

“My bank account is getting dry,” said Tall. She can’t make the full payment on time.

“In November we were busy,” Tall said. “Then, in December, I noticed people were not coming.”

The casualties of the natural gas leak that began in October are enormous. Up to 5,000 residents have fled the area to hotels and homes farther from the estimated 87.5 million tons of methane that have been pumped into the air by a Southern California Gas Co. facility. Residents have complained of nosebleeds, dizziness, nausea, headaches and respiratory problems. Students have been relocated to other schools.

A flurry of lawsuits have been filed by residents who continue to pay the mortgage on homes they can’t live in and who have had their lives turned on their heads by the disaster. Gov. Jerry Brown declared the situation a state of emergency. The South Coast Air Quality Management District, the agency that regulates Southern California’s air quality, is suing the gas company, accusing it of negligence in the design, construction and operation of one of the wells at the Aliso Canyon Natural Gas Storage Facility near Porter Ranch.

And Tuesday, the first criminal charges in Los Angeles County against Southern California Gas were filed by the county's District Attorney Jackie Lacey for failing to immediately report the gas leak to state authorities. Also Tuesday, the California attorney general filed a lawsuit, alleging state health and safety law violations. 

And now, businesses that are losing their customer base have filed a class-action lawsuit.

“We heard that there’s a dramatic loss of business, especially since it happened in their busiest time of the year — the holidays,” said Los Angeles City Councilmember Mitchell Englander.

Englander is calling on the city’s finance department to track how sales tax revenues have declined from previous years.

“From there, we may be able to offer reduced business taxes and we’re working with the county assessor to be able to offer reduced property taxes” he said.

Englander has joined the Valley Economic Development Center (VEDC) to provide micro-loans to small businesses that are struggling because of the gas leak.

Businesses most directly affected are the ones that rely on children in the area — from preschools and learning centers to martial arts centers such as King TaeKwonDo.

“I dispatched a team to go to Porter Ranch and I’m hearing pain and suffering,” said Alex Guerrero, chief operating officer of the non-profit VEDC.

More than half of the struggling businesses are retail operations.

“That’s where the big problem starts,” he said.

Seven businesses told him that if they don’t get some financial help, they might have to close their doors within a couple of weeks.

Business began to slide when people started to move out of the area but it plummeted after students were relocated following the holiday break.

“It became a second wave,” he said.

The VEDC is offering micro-loans ranging from $1,000 to $50,000, and small business loans up to $250,000 at market rates.

The state is working with the U.S. Small Business Administration and Los Angeles County to assess how many businesses were impacted and tabulate the potential damage, said Kelly Huston, deputy director of the California Governor’s Office of Emergency Services, in an email.

“We need that information to determine if we will formally ask SBA for their disaster assistance program,” she wrote. “It’s our experience that a Presidential Disaster declaration isn’t needed for SBA to authorize their disaster assistance programs — to their requirements.”

The state has to certify at least five small businesses in the area that have suffered substantial economic injury as a result of a disaster, Huston said.

But for business owners such as Tall, the help may come too late. She went to the gas company and waited two hours to ask for help.

“I found out they don’t have any solutions for business owners,” she said.

They did provide her with air filters because “we’ve been taking painkillers and my instructors are complaining of sore throats,” she said.

The divorced mother of one is also raising her nephew from South Korea.

Keeping afloat the business that she worked hard to build up is an uphill battle: “I don’t have the funds to send the full payment on rent.”