Kenneth T. Lombard Title:

President

Company:

Johnson Development Corp./Magic Johnson Theatres

Born:

Seattle, 1954

Education:

B.A. in communications, University of Washington

Career Turning Point:

Learning about development opportunities in the inner city while regional director for Grubb & Ellis Co.

Hobbies:

Golf, working out at gym, traveling

Most Admired People:

Grandfather (who was a businessman); the late Reginald Lewis, former chairman of TLC Beatrice International Holdings; Starbucks Chairman Howard Schultz

Personal:

Married to Channel 9 News anchorwoman Pat Harvey; two grown children

As president of Johnson Development and the L.A. DWP, Kenneth Lombard wields considerable influence in both the city's private and public realms

As head of Johnson Development Corp., Kenneth Lombard guides former Lakers basketball star Earvin "Magic" Johnson's business empire. Johnson Development has emerged as one of the success stories in inner- city development, starting with the Magic Johnson Theaters next to the Baldwin Hills-Crenshaw Plaza mall, then branching out into shopping mall partnerships, like the Ladera Center near L.A. International Airport.

Johnson Development has also formed partnerships with Starbucks and T.G.I. Fridays to open up outlets in urban communities from L.A. to Florida to New York. On the theater side, it has teamed up with Loews Cineplex Entertainment.

Currently, Johnson Development is in the midst of raising its second development fund: a $150 million-to-$400 million vehicle for inner-city development projects that is expected to close later this year.

But Lombard and boss Magic Johnson's interests also extend to the financial world. Three years ago, Lombard, Johnson and fellow celebrities Janet Jackson and Jheryl Busby purchased a controlling interest in Founders National Bank; last month, that bank merged with Boston Bank of Commerce to create one of the first bi-coastal community banks.

Lombard also has been active in civic affairs, serving on several L.A. city commissions. Currently, he's president of the L.A. Department of Water & Power Board of Commissioners, making him a player in the state's ongoing power crisis.

Prior to joining Johnson Development, Lombard served as executive vice president of Economic Resources Corp., where he raised venture capital. Before that, Lombard was a regional director for the investment banking arm of Grubb & Ellis.

Question:

How has the current push for L.A. inner-city redevelopment differed from similar cycles in the past?

Answer: The major difference is that in the past, when a company made a commitment to a project in the inner city, it was politically driven. Unfortunately, most of those were more like social experiments and they underperformed compared to what was promised. Frankly, after awhile, these projects were almost expected to fail.

Now, as suburban America fills up and opportunities there become fewer and more expensive, companies are beginning to realize that they can make a good business decision to come into these inner-city locations. That is going to be a much longer-term solution.

There's something else at work now, too. For the first time, you've got some successful projects up and running. When someone looks at the Crenshaw corridor and sees the business our movie theaters do, and see our other businesses in the area, and they say, 'You know, this works.'

Q: Can this push for development survive the current economic slowdown?

A: Most definitely, yes. These areas are so underserved. And when you look at how much opportunity there is and how much competition there is, you will see good strong economic performance at projects in these inner-city communities even through this downturn.

Q: What about the movie theater business that gave Johnson Development its start? Aren't you feeling the impact of the overbuilding of screens and the resulting bankruptcies of theater chains?

A: We have always been very selective in where we site our theaters. In the areas we're in, you don't have the overbuilding that you see on the Westside or in other areas of town. We're going to continue to look for opportunities to build more screens, but on a selective basis, carefully evaluating the market around each site.

As for our partners, Loews Cineplex, they did go into a prepackaged bankruptcy, to get their situation under control. Once they come out of bankruptcy, they will be stronger for it. We intend to continue our relationship with them.

Q: What is the working relationship between you and Magic Johnson? Who really runs the companies and how has that changed over time?

A: Earvin and I are partners. I have the responsibility for day-to-day operations, but no decision gets made without Earvin's blessing. He's the chief executive officer and I'm more like the chief operating officer. We both run the companies jointly.

As for whether this has changed over time, the answer is no. This is the way it's always been since I joined the operation. Earvin himself is as involved in running the companies as he has always been. We have a wonderful working relationship.

Q: What are the major projects now underway at Johnson Development?

A: Right now, on the development side of the business, we're primarily focused on working with Canyon Advisors to raise our $200 million second fund. The first closing is set for July 1.This fund will be used for future inner-city development projects.

We are also aggressively moving to expand our partnerships with Starbucks and T.G.I. Fridays. With Starbucks, we've currently got 24 stores and we've signed leases on or are planning to open 20 more this year. We're planning to open roughly 20 a year. On the T.G.I. Fridays front, we've opened our second store in the nation right here in L.A. and we plan to open roughly four to five restaurants a year.

Q: What about the Santa Barbara Plaza redevelopment project in South L.A. that you were once so involved in? Aren't you on the team put together by Chris Hammond and his Capital Vision?

A: Right now we're in a wait-and-see mode. Chris has done a great job assembling the properties. But now, there is a significant commitment that the city has got to make. The gap that has to be filled to make the project work is between $20 million and $40 million. Councilman Mark Ridley-Thomas is working hard to make this happen, but frankly, with the change in administrations and a new City Council coming, it's going to take awhile.

Q: Why did you decide to merge Founders National Bank with Boston Bank of Commerce?

A: When Earvin, myself, Janet Jackson and Jheryl Busby made our investment in this bank, it was with the understanding that consolidation was imperative for the survival of Founders and other community banks. You have a lot of very small banks that try to provide a service to minority entrepreneurs and small businesses in the inner city. But they frankly just don't have the horsepower to go it alone. For example, before this latest merger, Founders was a $100 million (in assets) institution that was only allowed to make loans of up to $1 million per transaction. Now, the merged entity can make loans up to $4 million.

Q: Every so often a report comes out saying that the banking community as a whole does not do enough lending in inner-city communities. What are your thoughts about that?

A: I feel very strongly about that. Banks do make some effort, but that effort is most pronounced when there is a pending approval of a merger or significant political pressure applied. I believe that loans are made to people based on relationships. Until you change the nature of those relationships to be inclusive of the community, a lot of the larger banks are going to continue to see themselves underperform as it relates to their commitments to small business in the inner city.

Q: As president of the DWP Board of Commissioners, how prepared do you think the agency is to weather the power crisis, especially if the crisis continues into next year?

A: I think the DWP is in a tremendous position right now. We have lots of power and I truly believe we can get through this summer without any blackouts. We feel we have isolated ourselves from the potential of blackouts. I also believe we've done a great job of positioning the DWP so that there will be no rate increases during the next few years.

Having said that, we are in a marketplace now where there are lots of changes.

Q: From your vantage point, how do you think this crisis has been handled by our state leaders?

A: The state is in a very difficult situation. This whole thing is very complex and the solution is going to be very complicated. I do not believe the solutions are political. Somehow, we've got to get away from all this politics. The solutions that are now on the table are not substantive enough to really solve this crisis. We're not there yet, and the more time we waste, the deeper this problem will become. We've got to get the best minds in the industry in the same room, and check all the egos at the door and check all the politics at the door and then truly come up with a solution that's in the best interest of the residents of this state.

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