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Excerpts

Several of the top civic, business and political leaders in Los Angeles convened last week for a one-day conference on possible strategies for nurturing economic growth over the coming years.

The April 23 event, timed to roughly coincide with the five-year anniversary of the April 1992 riots and billed as “Los Angeles: Rebuilding for the Next Five Years,” was co-sponsored by the Milken Institute, RLA and the Mayor’s Office.

Among those reflecting on how far L.A. has come since the civil unrest:

Los Angeles Mayor Richard Riordan; Kathleen Brown, chair of RLA and an executive vice president at Bank of America, former California State Treasurer; Linda Griego, managing general partner of Engine Co. No. 28, a downtown restaurant, former Los Angeles deputy mayor and former president/CEO of RLA; and Joel Kotkin, John M. Olin Fellow with the Pepperdine University Institute for Public Policy.

Some excerpts from the conference:

Kathleen Brown

Today we come together to discuss a nightmare a nightmare that each one of us remembers vividly. I know I remember my own experience that day. There are moments in history where you know where you were and you know what you were doing. That was one of those moments in our collective memories.

The legacy of what has happened in the last five years is still in dispute and unclear. I think, from my own perspective, that experience (of the last five years) does offer hope because, despite the failures to meet the initial goal and lofty expectations, (RLA) procured nearly $500 million in private donations and investments from local companies and corporations more money than has ever been raised for a riot-recovery effort in our nation’s history.

And also, we learned several lessons. The troubled neighborhoods of Los Angeles are, in fact, working-class communities of surprising economic strength. They’re homes to 15,000 manufacturing firms, firms that employ over 360,000 people and generate annual revenues of more than $54 billion.

I remember sitting as a trustee when I was treasurer of California on the state teachers’ retirement board. And we were having a presentation by an eminent investment banker who was coming to the retirement board seeking $500 million for investments in emerging markets around the world. And he put flags up on the wall and had presentations of what investment bankers would want to do. And he listed the risks and the rewards of investing in countries across the globe.

Remarkably, as I closed my eyes, those risks and rewards bear remarkable similarities to the risks and rewards of investing not in the emerging markets around the world, but of emerging markets much closer to home.

We learned some other lessons. We learned that small firms sometimes offer much better job growth prospects than big companies have been able to offer. They’re scaling back while small business are growing. We learned that workers’ skills are one of the inner city’s competitive advantages. We also learned that those competitive skills need to be upgraded and updated for the technological economy that we live in. And finally, we learned that rebuilding L.A. will take time.

I sometimes think of progress as a tedious process of taking two steps forward and one step back. For Los Angeles, I would suggest that we build a successful foundation for economic development, not only by replacing brick and mortar, but also by helping to renew the faith in the emerging markets that we call inner-city neighborhoods.

Linda Griego

Immediately following the 1992 disturbance, RLA was given a five-year mandate to improve economic conditions in neglected communities. In the course of developing strategies to help meet the need, what RLA learned about these communities has surprised many and contradicted many long-held myths about the lack of economic potential and significance of these neighborhoods to all regions.

In 1996, approximately 2.6 million people in L.A. County lived in neglected communities, a third of the population. These so-called neglected communities are not economic wastelands, as many still think. Instead, these communities have played significant roles in rebuilding California’s economy. These communities are one of the greatest sources of industrial strength in our region.

The neglected communities contain many of L.A. County’s biomedical technology, furniture, textile, toys, food processing, metal working and plastics firms. All have survived the economic recession and are positioned to deliver services and product domestically and abroad, now and into the 21st century.

These firms are owned by Latinos, African Americans, Chinese, Iranians, Koreans, East Indians and Vietnamese, to name a few. The employees generally live in the community in which they work. Employees tend to be predominantly Latino immigrants.

Business owners cite over and over again that the skilled and highly motivated local work force is the primary reason for their success. The availability of specialized labor emphasizes a major reason why businesses plan to stay where they are and continue to grow.

As of December 1996, an estimated 150 riot-related properties still remain vacant. Most are former liquor stores, which are concentrated in South Central L.A. In 1995 RLA surveyed over 1,100 residents who lived near the vacant properties and asked what kinds of goods and services are needed in their communities. The overwhelming response by nearly 50 percent of the responses was for quality supermarket or liquor stores.

A tremendous amount of building has occurred in five years. Businesses deserve a lot of credit for their sustained commitment to urban community. Unlike the aftermath of riots in Watts, Newark, Detroit and Washington D.C., where many businesses chose not to rebuild and fled the inner-cities, many (inner-city L.A.) businesses have rebuilt, repaired and added new stores. But much remains to be done.

Joel Kotkin

When we started the whole rebuilding process, I remember very much everyone was still sitting around waiting for Peter Ueberroth to pull endless rabbits out of various hats, and then it was the federal government that was going to come in a big way.

The first thing I want to leave with you, as we start to talk about these things, is the basic concept that we are on our own. Support from the federal government, the state government, is not going to be coming in any major way. Political power in this country is now in the hands of the people. So we’re gonna have to make it on our own.

That’s the bad news. The good news is that we’re showing some signs of being able to do this. As the Los Angeles economy has recovered, it has brought new opportunities to the neglected areas. We had a terrible period in the early ’90s. And I always have felt that the ferocity of the riots, the problems that we suffered, had something at least partially to do with this. We went through a horrific recession. Since 1992, we’ve started to come out of that, and we’ve started to make some real progress.

From ’96 to ’97, employment for L.A. County is up about 2.4 percent, sales are up about 5.6 percent, housing prices have started to creep up a bit. The vacancy rates are down in offices, and more importantly, in neglected areas there has been tremendous growth in absorption of industrial space.

L.A. is coming back not really as Tinseltown, but as a city of big shoulders, a city that makes things. We make television products. We make multimedia. We also make tortillias. We make bagels. And we make all sorts of other things. We make garments. This is a city that makes things and exports them around the world and around the country. And I think that is a very, very positive factor to L.A.’s recovery.

If you look over the past year, L.A. County has had a dramatic drop in unemployment, almost 50 percent, more than any major city. Obviously, this is an incredibly important thing to see because the best way to bring neglected communities together is the creation of jobs. And to show you that this is really having an effect on all citizens, since 1994 the number of people collecting welfare in L.A. County has dropped about 4.5 percent. That’s 127,000 people who are off of welfare. That’s real progress. We haven’t reached some sort of point of self-satisfaction, but we are making progress and doing it in the right direction.

It turns out Los Angeles/Long Beach has created more new businesses than any region in the United States much more than New York and Chicago. More than New York, which has a larger population. It has created many more jobs than Chicago, Detroit. And I think this really has been the source of recovery here in Southern California.

And interestingly, even if you look at a per-capita rate, with the exception of Houston and Dallas, which are located in the very robust Texas economy, and have other factors working in their favor, L.A. of the major, older cities in the country has the highest per-capita rate of new business start-ups.

So what’s really interesting to me is that in the midst of a very difficult period in our history, people are actually voting with their pocketbooks, and they’re voting with their credit cards and home mortgages to start new businesses. And if there is ever a sense that L.A. is coming back, it’s got to be seen as the growth of these businesses.

We are not going back to where we were.

Richard Riordan

What’s my vision for the next five years?

My vision is a city that is the safest big city in the world, a city where every child gets a quality education, where every human being has access to quality jobs, where government is more efficient and service-oriented, where we have a competitive tax structure.

I look forward to a downtown Los Angeles with a new sports and entertainment complex, Disney Hall, St. Vibiana’s, a Figueroa Corridor that we will be very proud of. I look at a revitalized Hollywood. I look at neighborhoods taking responsibility for themselves, cleaning themselves up, and being proud of themselves.

We’ve had a good start the last four years. City Hall is starting to be a friend of business. You no longer necessarily greet your lifelong enemy when you go up to a counter at City Hall. Sometimes you get a smile.

Our L.A. Business Team has done an incredible job of getting through complex permitting processes in the city. We have case managers that also will coordinate projects that involve more than one department of the city. Fed-Ex has volunteered hundreds of thousands of hours to teach city employees how to be customer service-oriented.

We also have the best minority business opportunity office in the country. We have set aside over $2 billion of money in the last three years for women- and minority-owned businesses. There also will be several hundred million out of the Alameda Corridor.

Our Community Development Bank is off and running and will be lending over $1 billion over the next 10 years to the economically disadvantaged areas of our city.

From the safety end, I’m challenging the police department in my new budget and privately to do a much better job of deploying the resources they have. A group of people from my office and the department are going back to New York to look at their highly sophisticated system of accountability in the police department. They’re also adding dramatically to technology and to other areas of that department.

I want more and more to get neighborhoods to take responsibility for themselves, and to demand of elected officials and government that we need their resources to make their communities safer, cleaner and healthier.

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