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Digest

Grim Outlook for Welfare Reform

A study released last week suggests policymakers may have a tough time implementing federal welfare reforms in Los Angeles County, where the economy is not producing enough jobs to accommodate the huge welfare population.

According to the report by the Economic Roundtable, an average of 2.5 job seekers on welfare will exist for every available job in the coming years. When the population of job seekers not on welfare is added to the mix, there will be an average of 5.4 job seekers for every opening.

Federal welfare-to-work legislation mandates a five-year lifetime limit on public assistance, with exemptions allowed for the most unemployable 20 percent of the caseload. To improve the odds of putting those people to work, the study’s authors recommend a review of training opportunities provided by Greater Avenues of Independence, the county’s main welfare-to-work program.

Living Wage Ordinance Ignored

Few contractors are complying with the city of L.A.’s living wage ordinance, according to two studies released last week, mainly because the city is not enforcing its own law.

The year-old ordinance requires all city contractors to pay at least $7.25 an hour with health benefits or $8.50 an hour without. But UCLA professor Richard Sander, who was hired to evaluate compliance with the law, found that only 40 to 50 of the 700 to 800 L.A. city contractors have submitted evidence that they are obeying the ordinance.

Meanwhile, the Los Angeles Living Wage Coalition handed the Bureau of Contract Administration, the department charged with enforcing the ordinance, a “C-minus” for its failure to enforce compliance. The Department of Water and Power received an “F” grade.

SBA Award Withdrawn

The Small Business Administration last week stripped its Young Entrepreneur of the Year award from a Santa Fe Springs businessman after his company filed for Chapter 11 bankruptcy protection.

Michael Hernandez, the 26-year-old founder of Santa Fe Springs-based American Headwear Inc., was scheduled to receive the award at a June 5 ceremony. SBA officials withdrew the award after discovering that American Headwear had filed for bankruptcy in March.

Venture Capital Boom

Venture capital investments in Los Angeles and Orange counties more than doubled during the first quarter compared with the year-earlier quarter, a study released last week revealed.

Companies in the two counties received a combined $231.5 million in venture capital during the quarter, compared with $113.8 million in first-quarter 1997, according to Price Waterhouse. The largest single recipient was Los Angeles-based Fountain View Inc., a nursing home operator that got an infusion of $69 million.

Other local companies on the Price Waterhouse list included Sonoma Systems of Marina del Rey ($9 million), IndeNet Inc. of Los Angeles ($9 million), Digital Insight Corp. of Calabasas ($8 million), RDL Commercial Technologies Corp. of Culver City ($7.5 million) and College Enterprises Inc. of Woodland Hills ($5.1 million).

Two New-Media Firms Acquired

Continuing a wave of consolidation that has swept through L.A.’s new-media industry, Atlanta-based iXL Holdings snatched up two more L.A.-based Internet firms, Digital Planet and Spin Cycle Entertainment.

The two acquisitions follow on the heels of iXL’s acquisition last year of L.A.-based BoxTop, which then became part of new division called iXL-Los Angeles. With Digital Planet and Spin Cycle added to the mix, iXL-Los Angeles now has 160 employees, making it L.A.’s biggest Web site-design entity.

Former iXL-Los Angeles CEO Kevin Wall was named vice chairman of the parent company. He will be succeeded in the top L.A. post by Trip Davis, former president of iXL’s San Francisco operation.

Terms of the deal for Digital Planet and Spin Cycle were not disclosed.

Office Depot to Buy Viking

Office products giant Office Depot Inc. last week agreed to acquire Torrance-based Viking Office Products in a one-for-one stock swap deal valued at $2.6 billion.

Following the acquisition, which is still pending regulatory and shareholder approval, the combined company would be headquartered in Delray Beach, Fla., although Viking will retain its Torrance offices as a subsidiary of Office Depot. Viking is the world leader in catalog sales of office products, while Office Depot is the world’s largest office-products retailer.

Political Victory for MTA

Four members of Congress representing East L.A. districts last week agreed to support a request that would allow the Metropolitan Transportation Authority to consider other transit alternatives besides a subway extension to the Eastside including a dedicated busway or light rail.

Some lawmakers had threatened to oppose federal funding to complete a subway extension to North Hollywood unless they received a guarantee that public transit to the Eastside would be improved.

Reps. Lucille Roybal-Allard, D-Los Angeles; Julian C. Dixon, D-Los Angeles; Esteban Edward Torres, D-Pico Rivera; and Xavier Becerra, D-Los Angeles, sent a letter to a congressional committee that is studying federal transportation funding. The letter endorses the MTA’s request for greater latitude in the way it spends $600 million in federal funds.

Pacific Enterprises Expands in Uruguay

Los Angeles-based Pacific Enterprises got a foothold in South America last week by winning a contract to build and operate a natural-gas and propane distribution system in Uruguay.

Pacific Enterprises, parent of Southern California Gas Co., will own 55 percent of the venture, with the rest owned by Uruguay’s state-owned power company Ancap.

Pacific Enterprises is pursuing an aggressive expansion strategy in South America, where it eventually plans to market and produce electricity, in addition to natural gas and propane.

Compiled by Dan Turner

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