Tuesday, October 6, 2009

Double The Pinch For Auto Wreckers

Interesting story from The Merced Sun-Star:

When Albert Romero opened Valley Auto Wreckers in 1971 with his late brother Paul they were literally starting from scratch.

Neither knew the first thing about auto wrecking or towing. Romero had just gotten out of the Air Force and his brother was an engineer. No bank would give them a loan since they were such novices. So they asked their mother for the seed money to start their business.

"Neither of us knew anything about dismantling," said Albert Romero, sitting in his office.

They started with one old tow truck and bought their first wrecking yard in Stevinson on a payment plan. Now the company has locations across the Valley and brings in about $1 million a year, said Romero.

Like any businessman, Romero laments the continually rising cost of doing business. Licenses, fees, insurance and taxes were a pittance in 1971 when compared to today's cost, Romero said.

Aside from the cost of doing business in the 21st century, Romero's wrecking company has to account for every car they buy and tear apart for scrap metal and parts. Twice a week he sends reports accounting for all the cars that come into his possession to the California Department of Motor Vehicles in Sacramento, a death certificate of sorts for demolished cars. The thick files weigh down one of his office cabinets.

But as of March of this year, Romero has been sending virtually the same reports to the federal government. And to do that he had to buy reporting software and pay a fee to the company that acts as the government's go-between. He also has to pay that company 35 cents for every car report they receive.

This redundant system, which auto wreckers must pay for, is the result of a federal law passed in 1992 to keep track of cars and to prevent the theft and resale of cars that go to wrecking yards, among other places. The National Motor Vehicle Title Information System, or NMVTIS, is administered by the Department of Justice.

But until this year, the DOJ had yet to set up the system. A 2008 lawsuit changed that. Headed by Public Action and other groups, the federal lawsuit finally forced the DOJ into implementing NMVTIS. In the process, auto wreckers have been caught in the middle. Now the feds are making them follow the law and in the bargain pay to report to the system through three companies that act as middlemen for the government -- middlemen who collect information already at the DMV. "We had to comply," said Romero. "They want us to go through an intermediary."

Martha Cowell, the executive director of the 185-member State of California Auto Dismantlers Association, says the feds and the state are working on joining their systems so people like Romero don't have to do the same thing twice. But how long that will take is anybody's guess, she said.

Until then, auto wreckers will just have to fork over the extra dough and send in their reports twice. "They now have an additional reporting requirement which means in most cases an additional cost to the business."

So much for small government.

Reporter Jonah Owen Lamb can be reached at (209) 385-2484 or jlamb@mercedsun-star.com.