“The health club industry has a background of coming into and sometimes going out of business without much notice,” Hirsch said.
Quick closures in Burbank have historically resulted in prepaid members having little recourse for recouping their balance. Throughout the early 1990s, three health clubs shuttered their doors with little warning, prompting hundreds of customers to seek help from city officials. A large facility in 1993 closed overnight, causing a sidewalk demonstration resulting in a 90-day moratorium on all health club licenses issued until the council and city executives could develop a stopgap.
Among the objectives of the revised ordinance was the goal of providing a mechanism for helping members of obsolete health clubs to recover at least a portion of prepaid membership fees.
“I was one of those members who lost out,” said Vice Mayor Anja Reinke. “There’s a way to do this that protects members and owners.”
In a sliding economy, however, obtaining the bonds has become an onerous task, Hirsch said.
“In discussions with the health club owners, they all seem to have a hard time finding an underwriter for the bond,” he said. “They all succeed eventually. But it’s not a common bond to find out there.”
In the most recent complaint rolled into City Hall last year, Bedrossian, owner of Burbank Athletic Club, relayed the hardship of having to obtain a separate bond for each of his two Burbank-licensed health clubs.
“In the event that the bond remains in place, all it does is tie my hands,” he added.
With 5,000 members, 3,500 of whom are prepaid, Bedrossian has an $800 monthly premium for two $75,000 bonds, he said at the March 10 meeting.
The new rules approved by the council Tuesday would likely cut that burden in half.
