Hahn Business Strategy Shifts Amid Criticism
By HOWARD FINE
If nothing else, L.A. Mayor James Hahn is clear about his business development priorities.
“Look, housing is business. That’s where the jobs go to sleep at night,” Hahn said last week, in the wake of last month’s departure of his economic development deputy, Jonathan Kevles, for a post with the Community Redevelopment Agency.
“I’ve been listening to those people who are building the housing and they have just as many if not more problems in dealing with the city as other businesses have,” the mayor said. “It’s one of the brighter spots in the economy right now and we want to keep it that way.”
But what about economic development that’s not housing?
Since taking office in July 2001, critics note that Hahn has never put forth a strong economic development plan, whether it’s trying to retain factories or fostering growth industries like biotech. It took him nine months to name Kevles to a post that, under Rocky Delgadillo, now city attorney, was one of the highest-profile positions in the Richard Riordan administration.
Now that Kevles has moved on at the mayor’s urging, both of them indicated last week Hahn says it’s unclear just what role a new economic development czar will play in the second half of his term.
“We’re talking with a number of people,” Hahn said. “But economic development is a very organic thing and the role of an economic development deputy is evolving. Maybe a new deputy will take us in a different direction.”
Hahn’s ambivalence has led academics and business owners alike to wonder whether he has a tin ear.
“When you take a look at L.A. or any other major urban area, the two most important hires a mayor can make are the chief of police and an economic development czar,” said Fernando Guerra, director of the Center for the Study of Los Angeles at Loyola-Marymount University. “After all, these are two of the areas that a large city like Los Angeles has the most control over.”
Jeff Kavin, owner of Greenblatt’s Deli in Hollywood, has been trying for years to get the city to free up some parking for his employees, to no avail. “The business point of view often is not getting through to city officials,” he said.
What has been missing, Kavin and others say, is a “go-to” person who can command respect from businesses and political leaders especially at a time of uncertainty over the soft economy, skyrocketing workers’ compensation costs and the threat of far-reaching regulations emanating from Sacramento.
“The city could really use a Peter Ueberroth-type figure, someone with wide credibility in the private sector,” Guerra said. Ueberroth, now a candidate for governor, headed up the Los Angeles Olympic Committee for the 1984 Games and after the 1992 riots he became the first head of Rebuild Los Angeles.
Kevles, who left his post last week to become a deputy administrator for the harbor area for the L.A. Community Redevelopment Agency, never fit that mold. Hahn first hired him in 2001 to head the Mayor’s Business Team, just a few years out of graduate school and with limited experience in the private sector.
Kevles received solid marks for his role in helping the city coordinate its response to the Sept. 11 terrorist attacks, but his selection by the mayor to head economic development the following spring was greeted with considerable doubt.
Earlier this year, the doubt grew. Hahn renamed the business team the Business and Housing Team and started focusing more on affordable housing. Up until then, its main focus had been helping businesses locate or expand in L.A.
Hahn stressed that he was not de-emphasizing the traditional role of economic development in helping business, which includes everything from helping secure operating permits to reducing the burden of business taxes.
“They haven’t killed the programs started under Riordan, but those programs certainly haven’t received the same priority,” said Fred Gaines, chairman of the Valley Industry and Commerce Association. “The city is just lumbering along, with no major advances in attracting businesses.”
Gaines and others said there are several things the city could do to make the city a more attractive place to locate to and do business in.
One example: helping companies with site selection.
“There really is no one person to call as a central clearing house for the city if you are a business in Chatsworth and you want to move to Pacoima,” said Ilsa Metcheck, executive director of the California Fashion Association.
Metcheck added that the city is not doing a good job in marketing itself to businesses in other cities across the United States or overseas. “That’s such an essential part of business development and we’re not doing that,” she said.
Hahn acknowledged that L.A. could do more.
“Look, we’re never going to do enough to help every business,” he said. “We can’t always help businesses get financing, which is their biggest obstacle. I’d love to be able to expand a lot of things we do, but with this budget situation in Sacramento, we’re talking about shrinking the number of employees citywide.”
There is one area that both Hahn and his critics agree on: changing the city’s business tax structure would be a major accomplishment.
Hahn said the city is moving ahead on the business tax front, noting that he signed several reform measures last month. Among those: allowing most businesses to file in a single tax category and eliminating some “pass-through” taxes that businesses pay on behalf of subcontractors.
As for the broader reform, Hahn said studies for a replacement to the business tax are under way, but the shrinking revenue pie limits options.
Of course, the other move that business leaders say would help the city’s economic development strategy is getting that high-profile person at the top.
“Appointing someone with a high-profile sends a signal that this mayor is serious about helping business,” Gaines said. “You do this and businesses will feel a whole lot more comfortable about the city.”