During his first six months in office, L.A. Mayor Antonio Villaraigosa has exuded energy and enthusiasm for the job and has become the darling of the national media. But many in the business community are sitting on the fence, wanting to see a stronger effort to assist local businesses, more tax reform and concrete results in addressing some of L.A.’s most pressing traffic and housing problems. In a recent visit to the Los Angeles Business Journal, Villaraigosa responded to these concerns and laid out his economic development strategy.
Question: What are you doing to make Los Angeles a more friendly place to do business?
Answer:
One thing we’re doing is getting people together to resolve situations. Let me give you an example. A few days ago, my office received word about a project in the Mid-Town area involving the CIM Group and a Target and Home Depot as anchors 130,000 square feet of retail and a great engine for economic development. I received a memo from a staff member that the project appeared to be dead. I called that staff member into my office and told them that in this city, while I’m mayor, we won’t write memos like that without a solution for how we revive that project. I had them bring all the parties together as I have on a number of occasions. I made it absolutely clear to all the parties that the city had put $8 million into the project, showing its willingness to invest.
Q: What kind of message do you think this sends to the larger business community?
A:
I did this because part of what you have to do in this job is roll up your sleeves and make it clear to everyone that we’re going to do everything possible to set the stage for investment in this city. This city has to bring in revenue and investment, or we’re going to die on the vine. You’re going to see a very active mayor in making these deals happen.
Q: Do you think your administration’s stance is now clearer?
A:
Since I was sworn in, there have been proposals for 25 additional high-rises 10-stories and above in downtown. Most of these are mixed-use projects. Now I’ve done this notwithstanding the fact that people have written that I’m a liberal Democrat. If we’re not creating wealth, if we’re not bringing in investment, if the official bird of Los Angeles isn’t the crane, then we won’t be able to do all the good things we would like to do for our people.
Q: So what were some of the issues of the Mid-Town project?
A:
For one thing, the price of steel and concrete have gone up and this is a steel and concrete project. The price of real estate has gone up and the (Los Angeles Unified) School District is offering (to sell the land for) three times what the land is probably worth. All of this has added pressure and disincentive to coming up with a deal. But my experts say this deal can work and everyone can make money off of it. But people have to stretch a bit to make it work.
Q: What about Washington Mutual’s decision to move 1,000 jobs from its Chatsworth call center to Texas and Costa Rica.
A:
By the time we came on the scene, Washington Mutual had already made the decision to move those jobs out. In cases like this, often they want to do a little damage control and they let you know after the decision’s already been made. That’s what happened here.
Q: What else are you doing to help businesses in L.A.?
A:
Business tax reform was a start. It eliminated the gross receipts tax for businesses with less than $100,000 in receipts. In the entertainment sector, that ceiling is $300,000 and the alternative minimum tax threshold went from $50,000 to $2.5 million. For everyone else, the business tax goes down 3.1 percent per year for the next five years.
Q: But what about the city’s structural deficit of nearly $250 million?
A:
Since I have come into office, I have been fiscally prudent. You can’t be business-friendly and run the government like it’s a big cookie jar. I’ve said no to the demands of several unions for a raise.
Q: What’s your broad economic strategy?
A:
I have Bud Ovrom here as my deputy mayor for economic development, focused on bringing business here, keeping business here and putting deals together. We’re focused on five main industries. One is trade and tourism, which represents 456,000 jobs in the city. We need to develop a logistics industry that can move goods out of the ports. There are estimates that we at the ports of Los Angeles and Long Beach can move up to 70 percent of all the goods that enter the United States. But this means we have to grow the port and green it. Before I brought on Geraldine Knatz as our port director, Long Beach was eating our lunch with just one-third of our staff. Geraldine is a change agent who’s focused on business.
Q: What about the other areas?
A:
The second one is the alternative energy industry. You’ve already heard about my goal of getting the DWP to go to 20 percent renewables by 2010. Everyone, even the oil industry, understands that over time, we’re going to move away from fossil fuels. I’ve already instructed the city’s pension funds to support investments in alternative energy technologies. Those are the businesses of the future and L.A. should be the site of those businesses.
Q: What else?
A:
Entertainment. We have got to be a business-friendly city committed to focusing on the entertainment industry. Early on, I said we’re going to eliminate fees for filming on city properties. I’m also going to use my political capital in support of AB 777, the statewide $100 million tax credit for film companies. Also, we want to marry the new technologies to entertainment. We have all the talent here, so we should be the place where this happens. Next is biomed and biotech. We intend to move on that biomed park out near County-USC Medical Center. I’m going to make sure there’s the political will to do it.
Q: What about the Mayor’s business team, which was drastically scaled back under your predecessor?
A:
The Business Team is back and we’re focused on mixed-use development and on bringing in businesses in the five industries I mentioned. I don’t have 20 years like Tom Bradley had or 16 years like (Chicago Mayor Richard) Daley has had. I’ve got four years and I want to see tangible results here.
