With a long-standing reputation of being business unfriendly, Los Angeles is now on the right path and beginning to attract companies to build their futures in our great city.
This new approach to business started with Mayor Antonio Villaraigosa’s appointment of Deputy Mayor Austin Beutner as the city’s “jobs czar.” As a successful business owner, Beutner understands the needs of business. More importantly, he knows the steps that this city must take to put us on an accelerated pace of economic growth and job creation.
For decades we’ve watched as other cities and states entice our California-born companies to leave. We’ve been on the sidelines as our competitors have been winning the jobs game with generous incentives and bold tax breaks.
Now, with the current economic climate, we can no longer afford to lose any more.
When Chinese green tech leader BYD announced it was establishing a North American headquarters in the heart of Los Angeles, it was a major coup. BYD is one of the largest vehicle makers in China, and one of the world’s largest manufacturers of rechargeable batteries and solar panels.
It has been many years since a company of this stature chose to locate in Los Angeles, and the impact will be substantial. BYD will produce jobs, especially the jobs of the future – those tied to the green revolution. Its presence will further establish us as a global center of green tech, and help us to attract other innovative companies.
Perhaps the greatest advantage is the message it sends to the world: Los Angeles once again means business.
Attracting a global company like BYD was no easy task, even for a global city like Los Angeles. There is no question that we had to be extremely competitive in offering the kind of incentives our competition has been doing for years. If we take a closer look at the math, there is also no question that this is a winning deal for the city.
That didn’t stop the Business Journal from criticizing the deal in an article in the Sept. 6 article issue (“Sticker Shock? Electric car maker’s jobs to cost L.A. millions”). But the Business Journal needs to sharpen its pencils and take another look at how the numbers add up. Consider:
The largest component of the package is $2 million to fund the renovation of the BYD’s new headquarters in downtown Los Angeles. Those funds will come from a federal government program, at no cost to the city. This is exactly what these funds were intended to support: economic development, job creation and community revival.
Some critics also wrongly question other incentives provided to BYD, such as the promise to purchase some of its state-of-the-art vehicles. This element of the incentive package does not actually cost Los Angeles one additional dollar. These funds have already been earmarked for the purchase of vehicles needed for the city fleet. This means we’re not losing money, rather, we are investing in the latest green technology and jobs in our own community.
Los Angeles also will purchase solar panels to cover parking spaces. This will be an upfront cost for the city, but the power generated from these panels is needed by the city, furthers our goals to use renewable energy and produce revenue that will ultimately offset the investment.
The city also has made wise use of existing city incentives, such as Department of Water and Power subsidies, to piece together this winning package. These subsidies are offered to all new businesses, not just BYD, in state enterprise zones. By leveraging DWP discounts, it means new jobs are being created. And that is just what the city intended when it first adopted the rate plan.
Additionally, criticism of the city’s lease guarantee to the site’s property owner is badly misplaced. The guarantee declines annually, with the city retaining sublease rights, and Los Angeles would have a claim against a $14 billion company that is 10 percent owned by billionaire Warren Buffett.
Then there are the hard figures that have to be added to the plus column: BYD will make available – at no cost to the city – five buses to use in a pilot project.
In reviewing the math more accurately – $2 million from federal sources, procurement of energy-efficient green cars that L.A. needs and has already budgeted, the free use of buses, great use of preexisting DWP subsidies and other incentives – it should be clear that the costs are low and the benefits are high. It adds up to a solid win for this city.
It’s a win that Los Angeles needs.
Carol Schatz is president and chief executive of the Central City Association, which lobbies for businesses in Los Angeles County.
For reprint and licensing requests for this article, CLICK HERE.