Fruits of Many Labors Begin to Show By SHELLY GARCIA Senior Reporter Economic development was a cinch when the San Fernando Valley was still dotted with orange groves. But the groves gave way to housing tracts and industrial parks and pretty soon the pastoral valley was transformed. Fast forward a half century later. The population has exploded beyond the capacity of the city’s housing stock, businesses are heading for the border almost any border and job growth is faltering. Advocates: Antonia “Becky” Villasenor of Pacoima Partners and Planning Commissioner Tony Torres (photo). Many neighborhoods are old and languishing. Commercial properties are outdated, if not obsolete. And after decades of creeping sprawl there is nowhere else to go if only because the freeways are too congested to get you there. “The city is growing, growing, growing,” said Jane Blumenfeld, principal city planner. “It first used up the land, and then when it got used up, people starting looking inward again. Most cities did that centuries ago. We’re doing it now.” After years of policies that chased businesses farther and farther outside the city, economic development efforts are zeroing in on urban cores. But winning back investment to these areas is no gentlemen’s game. It is a rough-and-tumble race to rebuild the infrastructure needed for business to flourish cut red tape and provide funding and financial incentives to invite development and retain and attract businesses and create transportation alternatives. And do it all with diminishing budgets. In recent years, the city has launched a profusion of sometimes conflicting initiatives to feed the economic trinity of jobs, business and housing. “L.A. is a very difficult place to have a business friendly environment,” said Robert “Bud” Ovrom, CEO of the Los Angeles Community Redevelopment Agency, who joined the agency from a post as city manager of Burbank. “The left hand doesn’t know what the right hand is doing. I don’t say that in an overly critical way. One council district is the size of Pasadena and Burbank together. L.A. is a big place, but I do feel we’re moving in a better direction and trying to overcome the complexity of this big city.” Task forces have been dispatched to help establish policies to guide growth, streamline systems and make government more responsive. The Mayor’s office recently formed an Economic Development Cabinet to help coordinate often overlapping efforts between the CRA, planning department, community development department and the housing department. Another group, the Industrial Development Task Force, is studying the impact of a recent disturbing trend to convert industrial properties to retail use, and in the process trade high wage jobs for minimum wages. Red teams are being formed and dispatched to try and keep businesses from leaving the city and the state. The deputy mayor for economic development and housing has marching orders to meet with at least two businesses a week. Some point out that the efforts are long overdue. For years, the CRA, the agency that perhaps bears the brunt of the burden for rejuvenating neighborhoods, failed to do so. Consider that in Panorama City, one of the city’s redevelopment project areas, a 13-story office tower has remained vacant since the 1994 Northridge Earthquake, and so has a Montgomery Ward building, even though it was acquired by Kmart. In Pacoima, it has taken years for the owners of the former Price Pfister plant to sell the property, even though the facility long ago transferred its operation to Mexico. And in North Hollywood, a 16-acre parcel languished for more than 10 years before the current developer, J.H. Snyder Co., was secured and the project got underway. Languishing properties “I think the redevelopment agency during the ’90s was an inhibitor to development,” said Ovrom, who was installed to head the CRA about a year ago. “Consequently there are sizeable properties that have laid fallow for years no tax revenue, no jobs, no convenient shopping.” Mostly under Ovrom’s tutelage, the CRA’s Valley units now have projects underway in Pacoima, Canoga Park and Reseda, in addition to North Hollywood. Meanwhile, other city agencies have ramped up their efforts to boost the housing stock, particularly so-called affordable and workforce housing, homes and apartment units that can be offered below market rates to low- and middle income residents. “If you could say there is a platform to Mayor (Jim) Hahn’s economic agenda it is housing,” said Renata Stimril, deputy mayor for economic development and housing. In recent years, the city has established a housing trust fund to build affordable housing, it has increased density bonuses to induce developers to build more affordable units, it has helped create new funding sources for workforce housing and it has passed an adaptive re-use ordinance that allows developers to convert industrial properties to housing units. “The result of that specific strategy is housing has doubled,” said Stimril, “from just under 6,000 units when (Hahn) came into office to this year we’re on pace to permit 12,000 units.” Housing may well be the linchpin of any economic development efforts. Without it, the supply of workers declines and with it, so does the supply of businesses. But a supply of workers alone won’t keep businesses in L.A. That can take a host of factors, not the least of which is room to grow. And creating housing for the workforce may turn out to be the easier problem to solve. There is nothing the city can do to alleviate the high business costs imposed by the state. And there is very little it can do about the free market forces governing the stock of commercial facilities. “In the San Fernando Valley there aren’t a lot of sites for ground-up development so you have a limited number of opportunities with increased competition from investors,” said Tim Regan, vice president of development and acquisitions for Voit Development Co. With the cost of money at an all-time low, speculators are able to buy land at high prices and hold onto it for years. Developers meanwhile, are constrained by the current cost of the land, which has to pencil out at current-day prices when the development is completed. Scarce properties Increasingly, businesses seeking to expand are having a hard time finding properties, and with few development opportunities, few new properties are anticipated to come onto the market. “I think it’s a very strange time in the marketplace,” Regan added. “We’re seeing prices for land and product at levels we’ve never seen before, which makes it difficult for deals to pencil. There’s a threshold where the price of the land just doesn’t work for those who are going to be end users or the tenants, and that will force them to other areas.” That’s especially problematic from the standpoint of attracting industry. Unlike retail stores, that need to locate in affluent, core areas where the shoppers live, industrial users can easily locate in outlying areas, where land prices and rental rates are cheaper. There are some who say it is unrealistic to expect to replenish the jobs lost in aerospace and manufacturing within the Valley floor. “To suggest we should be devoting large tracts of land to industrial use solves one problem but it creates another,” said Cliff Goldstein, a partner at JH Snyder Co. “Those uses might be more appropriate in the Inland Empire and Lancaster and other places where land is plentiful.” Others worry that without a core of manufacturing jobs, the Valley’s economy will suffer. “Right now you’re seeing a major conversion of industrial properties to retail use all over Los Angeles,” said Roberto Barragan, president of the Valley Economic Development Center. “There are no or little restrictions. It’s extremely easy to come in, buy industrial property and build retail. We have to discourage people from converting industrial properties to retail.” Such is the case in Pacoima where the former Price Pfister plant is slated to become a center anchored by a Lowe’s home improvement store. The implication is not lost on L.A. City Councilman Alex Padilla, whose district includes Pacoima and where good jobs and good benefits to go along with them are sorely needed. By the same token, the development sits in a concentrated residential neighborhood, and a site with heavy industry would strike right at the residents’ quality of life. “One of the main reasons I’m open to retail use is it’s part of that overall balance,” Padilla said. “To be heavy industry, it’s almost like dropping a napalm bomb because it doesn’t connect the people.” The city has begun an inventory of the area’s industrial properties and land in the hopes of matching those resources to the needs of businesses. But as housing needs continue to take center stage, there will be fewer areas suited to industrial development. Perhaps the larger problem is that the economic base of Los Angeles and the Valley, indeed the nation overall, has changed. Much manufacturing is now outsourced overseas and since the end of the technology boom, no single industry has emerged to replace it. City officials concede that it’s virtually impossible to plan for those needs when they haven’t even identified what the next generation of industry will look like. “The problem is nobody has moved out front to say we’re the next industry that’s going to create jobs en masse,” said Stimril. “So the answer is working with our partners and trying to evaluate and figure out what the next industy is that’s nascent and going to grow. The only thing I can say is we’re paying attention.”
