Rent-to-own News - Price controls and property taxes top CAL-APRO's May 20 agenda

Paul Davis has seen first hand the damage price controls can wield on an industry.

As president of the California Association of Progressive Rental Organizations (CAL-APRO), Davis hopes to aim the spotlight on California's restrictive price fixing statute that limits not only the prices of new goods but the prices of used goods as well.

The price caps built into the recent law, which took effect in 2006, make adjustments to the market impossible, says Davis, who owns two Nations Rent-To-Own stores in the state. Accommodating things like spiking gas costs into pricing is not possible under the current law.

"With these gas prices, the question is 'are you going to be able to turn a profit to stay in business?'," Davis says, "We are unable to make any changes to adjust to that because of the strict pricing guidelines. This California law, in a modest amount of time, will probably put the small guy out of business."

CAL-APRO President Paul Davis.

Addressing California's pricing statute takes center stage at the annual CAL-APRO Spring General Meeting set for 11 a.m. to 4:30 p.m. May 20 in Ontario, California.

CAL-APRO has approximately 15 member companies, according to Davis and he's hoping to see at least half of them at the annual meeting.

California is one of four states to adopt price controls on the cash price of items in rent-to-own stores, joining West Virginia, Maine and Hawaii. In addition to taking pricing control away from local dealers, the new law also gives an unfair advantage to larger rental companies with multi-state locations who can sell "capped" merchandise out-of-state at higher prices, Davis says.

The meeting will also address county taxation issues, namely the fact that California counties are not in line with the new state pricing guidelines and assess taxes based on depreciation over time.

According to the state's pricing structure the maximum selling price of a products is reduced by a percentage of revenue generated by that product. The result in most cases: counties can levy taxes based on valuations that are higher than what a dealer can actually charge.

"I've been taxed on items as much as 320 percent of what I cash rented them for," Davis says, "all based on my cost in their little formula. The counties have no way of adjusting assessment values for the new law."

And according to Ed Winn III, counties can continue to assess taxes even if their formula is at odds with that of the state.

"The state's doing it on dollars and county's doing it on time," Winn III says. "The only fix is to go back to the legislatures that thought it was such a good idea to fix prices in the first place and persuade them to unfix them."

Davis says energizing state rent-to-own dealers will be critical in deciding how to pursue the issues. A short-term tack, according to Winn III, could consist of an amendment that updates how counties assess personal property tax.

On a related note, the Texas Association of Rental Agencies -- following a similar successful move by the car leasing industry -- is backing a grass roots effort to amend the Texas Constitution to provide property tax relief for rental dealers in that state.

For more information on the CAL-APRO meeting contact Paul Davis by phone at 951/453-1625 or by email. Advance registration is required to allow for complimentary lunch planning. TRIB Group is a generous sponsor of the meeting.

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