Overview/39 inches/mark2nd

By LARRY KANTER

Senior Reporter

With 1999 only days away and a new millennium just around the corner, Los Angeles truly is a city on the verge.

The question is, on the verge of what?

Following a deep recession, a dramatic economic transformation, wrenching social conflagrations and a series of natural disasters during the first half of the ’90s, L.A. generally has been humming for the past several years, enjoying the fruits of a strengthening economy.

Now, with the decade drawing to a close, a remarkable array of issues are on the table everything from ambitious economic development projects like the expansion of LAX and the redevelopment of Hollywood to political issues such as charter reform, Valley secession and the mounting clout of Latino voters.

How these issues come together over the next several years could say a lot about how L.A. makes its way into the 21st century. And the fact that such changes are occurring as the city straddles the millennium only serves to make them more dramatic.

“Numbers have a certain mystical power,” said California State Librarian Kevin Starr. “The change from one millennium to another in one sense is arbitrary, but in another it has great force. It provides an opportunity to express a sense of historical destiny. It gives you the chance to think in thousand-year cycles instead of 10-minute cycles.”

While Starr and other deep thinkers ponder the big picture, much of L.A. has its hands full with concerns over what 1999 will bring.

The recent crop of economic forecasts has been nearly unanimous in warning that California’s economy will slacken in the year ahead, largely the result of ongoing global woes. Overall job growth in the state is expected to ease from more than 3 percent in 1998 to just over 2 percent in 1999.

Many economists predict that the Asian economies have hit bottom and could begin to rebound in early 2000, at which time demand for California exports could rise once again. But predicting the future is a tricky business, and some local firms already are beginning to scale back their expectations.

Consider Wilshire State Bank. The Mid-Wilshire-based institution has emerged as one of the region’s leading lenders to small, minority-owned businesses. In 1998, the bank’s lending volume grew some 30 percent, mostly as a result of demand from small retailers and sole proprietorships, said Xavier Chavez, the bank’s senior vice president.

The coming year is likely to be far calmer, Chavez said.

“We’re not going to see the same growth as in recent years. Loan demand will not be as great, because small businesses will not be needing working capital to expand,” Chavez said.

The question is, what will such scaled-back expectations mean for some of L.A.’s upcoming development projects which are anything but modest in scope? Just consider the high-profile projects on the drawing board:

? In downtown L.A., construction has begun on the Staples Center arena and the Cathedral of Our Lady of the Angels, and after years of delays and fund-raising woes, the Disney Concert Hall appears to be on track. Collectively, these developments could transform downtown L.A. into a bustling urban center, according to backers a promise that raises the eyebrows of skeptics wary of failed redevelopment schemes in the past.

? On the Westside, the first major movie-studio development in decades the DreamWorks SKG project at Playa Vista finally got its financing in order and is poised to break ground on one of the area’s last remaining parcels of vacant land. The development, which includes thousands of new housing units, threatens to further urbanize an area already reeling from congestion, critics contend.

? The MTA’s Red Line subway will soon connect the East Valley to downtown and Hollywood, which is undergoing a significant facelift of its own, including TrizecHahn Corp.’s plans for a large-scale entertainment-retail complex at the corner of Hollywood and Highland.

Add to the mix the $8 billion to $12 billion proposal to expand LAX; construction of the Alameda Corridor (as well as the newly launched drive to construct a similar transportation corridor in the San Gabriel Valley); a drive to break up the L.A. Unified School District; a new city charter; a likely referendum on San Fernando Valley secession; more and more gridlock on the streets and freeways; and a widening gap between the region’s rich and poor.

All told, it’s clear that Los Angeles is juggling a remarkable number of balls simultaneously.

“It’s very much a work in progress,” Jack Kyser, chief economist of the Economic Development Corp. of L.A. County, said of Los Angeles on the verge of the 21st century. “It’s an area in a continuous state of transformation.”

When it comes to social and economic change, it will be hard to beat the ’90s, a time likely to go down as the most tumultuous decade in L.A. history since the 1870s, when the bottom dropped out of the region’s economy after its first real estate boom went bust.

The transformations forced by the end of the Cold War and the near collapse of the aerospace industry were among the most dramatic ever in a city whose most notable feature has been constant change. L.A. County lost some 237,000 manufacturing jobs including 137,000 high-tech and aerospace positions between 1988 and 1995, although the numbers have begun to pick up since then, according to the EDC.

Unemployment reached double-digit levels as some of the city’s largest corporate citizens including First Interstate, Security Pacific, Thrifty Drug Stores and Lockheed either left the area or were acquired by larger, out-of-state rivals.

Such upheavals were matched by social and even geologic ones, when mounting social and racial tensions erupted into full-scale rioting in 1992 and the region was hit by the devastating Northridge earthquake two years later.

Much has changed since then. The economy has become far more diverse, dominated by small and medium-sized firms and thousands of one- and two-person enterprises; 94 percent of L.A. County companies employ fewer than 100 people, according to the EDC.

Racial tensions also have been diffused, partially by a surge in political participation by Latino and Asian voters, who are credited with helping change the balance of power in Sacramento.

“The mood in the early ’90s was absolutely apocalyptic. L.A. seemed like a city in some kind of psychotic condition,” said Starr, who is writing a book about Los Angeles. “Now, you have tension, but it’s just the normal tension of a great city.”

But many wonder if those tensions aren’t more severe than that.

“For the overall economy, there are reasons to be optimistic. But the rising tide has definitely left some boats behind,” said Michael Woo, a former L.A. city councilman and director of the Local Initiatives Support Coalition, which attempts to funnel investment into inner-city neighborhoods.

Woo is especially concerned about the working poor. A study by the L.A. city Housing Department found that two out of five rental households spend more than 50 percent of their income on rent. And the housing situation could get worse. While L.A. County’s population is continuing to grow, the number of permits for new-home construction has remained flat, causing a shortage of available units that has forced many families to double or triple up.

Others worry that the recent recovery has resulted in a bifurcated economy with high growth at the top, higher growth at the bottom, and a hollowing out of the middle. A study of the fastest-growing occupations in L.A. County by the state Employment Development Department found the highest rates of growth among low-paid positions such as apparel-industry pattern makers and home health care workers, as well as such high-skilled jobs as systems analysts and computer engineers.

“Even though the economy has been very good, it has not been very good for working people,” said Maria Elena Durazo, president of the Hotel Employees and Restaurant Employees Union, Local 11.

Nonetheless, Durazo remains optimistic about the next few years, especially about the large-scale developments on the horizon, which promise to bring new jobs to the area and, if Durazo has anything to say about it, new members to her union.

Indeed, organized labor has been exerting increasing muscle in L.A. politics over the past several years and remains a force to watch.

It’s unlikely that the Staples Center and TrizecHahn’s Hollywood and Highland project would have moved forward so smoothly without union support. Labor likely will play a large role in some of the major developments to come. Witness Mayor Richard Riordan’s recent appointment of labor chief Miguel Contreras to the Board of Airport of Commissioners which could help garner labor support for his proposal to expand LAX.

Of course, once a project is built, there is no guarantee that consumers will come. L.A.’s recent history is rife with failed development schemes. Will it be any different this time? In Hollywood, there is reason to believe that it will. Rents and land values already are starting to rise. And new owners with new ideas such as CIM Group, which has been successful with retail projects Santa Monica and Pasadena have been snatching up properties in the area.

If successful, such large-scale projects can “serve as potent symbols of social achievement,” helping to pave the way for even more development, said Starr. Conversely, an unrealized project, such as the MTA’s subway misadventure, “can represent a terrible failure for L.A.,” he said.

Keep your eye on politics, as well. There will be two crucial elections in 1999 that could determine the future of charter reform and the composition of the L.A. school board.

And then there’s Asia. It accounts for 50 percent of exports leaving the L.A. Customs District, and the area remains mired in a severe recession, which economists say could take a toll on exporters of everything from computer parts to clothing. Add to the uncertainty the possibility of a longshoreman’s strike this summer, and the entire trade sector which remained robust even throughout the recession clouds considerably.

Still, for many Angelenos, it’s hard not to be optimistic about L.A.’s future especially considering its recent past.

“We have turned a corner in Los Angeles,” said Xandra Kayden, a public policy researcher and president of the local chapter of the League of Women Voters, who moved to Los Angeles a decade ago only to see the region descend into near chaos soon after her arrival. Now, she said, “we seem to be past the major disasters that seem to befall us. The economy is doing well. There are a lot of things that seem to be pointing in the right direction.”