Welfare Crisis

The welfare reform provisions enacted in August by the federal government, combined with proposed actions in California being considered by the Wilson administration, could derail L.A.’s economic recovery, according to a study released last week by the University of Southern California.

The report, titled “Los Angeles in an Era of Welfare Reform,” predicts escalating job losses, an increase in social problems related to poverty, and an inability by the private sector to make up for the hole in the public safety net created by reform.

“The number of Los Angeles County welfare recipients who will slide deeper into poverty because of welfare reform could equal the entire population of Long Beach, the county’s second largest city,” said Jennifer Wolch, the study’s principal investigator.

The study estimates that between 250,000 and 518,000 people in L.A. County could lose some or all of their welfare benefits within the next six years.

That would mean less money to spend on food, clothing, housing, medical service and other necessities, causing a direct loss to the L.A. economy of between $127 million and $1.5 billion a year, the study said. It also projected that child abuse will increase, more children will end up in foster care, and the number of people experiencing homelessness will grow by up to 80 percent.

Museum Bailout

The Los Angeles City Council last week approved giving $642,000 in city funds to the Hollywood Entertainment Museum to help pay off short-term construction debts.

The money had been set aside as part of $2.5 million the Community Redevelopment Agency had committed to the museum. The money originally was intended to pay future rent for the museum’s Hollywood Boulevard space.

Museum officials in February asked the CRA to allow them instead to use the money to help pay off nearly $1.5 million in construction liens from 12 contractors.

After a recommendation from City Councilwoman Jackie Goldberg, the council approved the money reallocation 11-0.

CRA officials several months ago required Hollywood Entertainment Museum President Phyllis Caskey to present a plan to pay off long-term debt and get the museum into a break-even position. Under the plan, the museum’s board of directors hired Sacramento lobbyist Cliff Berg to seek $3 million in state educational funds.

The museum which opened last year after 10 years of delays has faced criticism from community activists for using millions in public funds while only attracting a limited number of visitors.

Boost for Ahmanson

H.F. Ahmanson & Co.’s hostile takeover bid for Great Western Financial Corp. got a shot in the arm last week, when Ahmanson announced better-than-expected earnings for the first quarter of 1997.

Ahmanson, now in a battle with rival suitor Washington Mutual Inc. for control of Great Western, announced net income for the first quarter ended March 31 of $103.1 million (87 cents per share), compared with $64.8 million (45 cents a share) for the like period a year ago. Net interest income was $317.6 million vs. $317.0 million.

Ahmanson’s first quarter net income represented a 59 percent increase over 1996, well in excess of analysts’ forecasts. That news sent Ahmanson share prices up $1.375 in the two trading days after last Tuesday’s announcement, closing Wednesday at $36.875. The price rise bolstered Ahmanson’s takeover bid for Great Western, raising the bid’s value to about $6.2 billion.

Vons Deal Done

Pleasanton-based Safeway Inc. completed its acquisition of Vons Cos. Inc. last week, creating the nation’s second-largest supermarket chain.

Arcadia-based Vons will continue to operate its Vons and Pavilions stores under their current names, under terms of the buyout.

Ironically, it was Vons that bought Safeway’s Southern California operations in 1988. Last year, Safeway decided to make a return to the Southern California market and made a bid to purchase Vons, the region’s second largest supermarket chain.

As a result of the acquisition, Vons will be able to combine its buying power with that of Safeway, allowing it to acquire products more cheaply which should result in lower prices for consumers, analysts say.

Another Anschutz Franchise

Los Angeles Kings co-owner Philip Anschutz is expanding his stake in the sporting world with last week’s announcement that he will launch a new professional soccer team.

Major League Soccer which currently has 10 franchises announced last week that Anschutz will be the owner-operator of a new Chicago team. The league, which includes the L.A. Galaxy, will also front a team in Miami.

This is the latest sports-related move for Anschutz, who bought the L.A. Kings hockey team last year with partner Ed Roski. Both are also co-developers of a proposed new sports arena in downtown Los Angeles, which will be home to the Kings and Lakers.

This will be the second major league soccer team owned by Anschutz. He also holds the Colorado Rapids in Denver, where his company is based.

By Dan Turner, Douglas Young, Danel Taub, Julie Sable and Joe Bel Bruno

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