These Trying Times : Joblessness, Credit Crunch, Lower Sales, More on Welfare

It’s belt-tightening time in the San Gabriel Valley.

Rising unemployment, a credit crunch, shrinking sales receipts, swelling welfare rolls--the economic indicators have been saying “recession” for the past six months.

Signs of slowdown abound. A once-busy shoe store in Monrovia is shut down. Car salesmen in El Monte sit idly, waiting for customers. The Pomona City Council talks about layoffs to balance the municipal budget. Construction projects in Pasadena and Altadena beg for financing--sometimes long past their planned completion dates.

By some accounts, the recession of 1990-91 is a “spotty” one, dealing the San Gabriel Valley only a glancing blow.

It’s as much an insidious state of mind as an assortment of fiscal ills, said Bruce Ackerman, executive vice president of the Pasadena Chamber of Commerce. “Consumers and small businesses who have no reason to tighten up, just do so out of fear,” Ackerman said. “People say, ‘Gee, if it’s that bad out there, I better slow down.’ There’s a lot of that.”

Added Cal Poly Pomona economics professor George Galbreath: “The San Gabriel Valley is not among the high-suffering regions.”

Try telling that to Miguel Lucero.

For six months, Lucero has been scouring the San Gabriel Valley on his bicycle, looking for a work. “They take your application, but there’s no work,” said Lucero, 21, a warehouse worker from Baldwin Park. Now, tired and hungry, he’s applying for a $312-a-month welfare check.

“I hate to have to be here,” he said, surveying the packed waiting room at the Los Angeles County Public Social Services Department. “This is the bottom.”

According to county records, San Gabriel Valley welfare rolls are up for all major programs, reflecting hard times in the region. Increases of almost 12% in Aid to Families with Dependent Children, which provides assistance to parents of small children, lag slightly behind the county average.

But the program for single, destitute people such as Lucero shot up by a third last year, outstripping county increases.

Advocates for the poor say the dramatic rise is a sign of the San Gabriel Valley’s increasing homelessness problem. “We’re getting a lot of evicted people now,” said Sylvia Franco, director of El Monte’s Interfaith Community Outreach. “The people coming in for cold-weather shelters this year tripled. There are a lot coming in after they’ve lost their jobs and their benefits have run out.”

State figures show unemployment up dramatically in San Gabriel Valley cities, though only Azusa, Baldwin Park, El Monte, Pomona and Rosemead exceeded the county rate of 7.4%.

But for the local jobless, the dilemma is just as intractable as elsewhere.

In West Covina, a few miles away from the El Monte welfare center, sheet metal worker James Denton glumly filed for unemployment benefits. Denton, 41, of Hacienda Heights, has 18 years’ experience shaping sheets of metal into air-conditioning and heating vents. He called the job picture “the worst it’s been since ’76.”

Despite what agents say is a recent mini-boom in real estate sales and some signs of life on the car lots, the recession has indeed reached the San Gabriel Valley, economists say.

Though separate data for such categories as housing starts or business investment is difficult to cull for the San Gabriel Valley, sales tax revenues for the region’s 29 incorporated cities present a revealing picture of the ups and downs of the economy.

Eleven of 28 cities in the region (excluding Diamond Bar, which incorporated in 1989) recorded declines in the number of dollars brought in from 1989 to 1990. Most of the rest were unable to match even last year’s inflation rate of 6.1%.

Only Monrovia, Pasadena, Rosemead, Sierra Madre, South Pasadena and Walnut recorded real revenue increases, exceeding the inflation rate, figures from the State Board of Equalization show.

Preliminary taxable sales totals for the final three months of 1990, when the recession flowered, show 13 cities recording declines from the same period in 1989, according to an analysis by the accounting firm of Hinderliter, de Llamas & Associates.

The figures are of more than academic interest to the cities, which collect 1% of taxable sales within their boundaries. Sales tax revenue usually provides a major share of municipal operating budgets.

“A couple of things are going on here,” said Lloyd de Llamas, a partner in the firm, which compiles sales tax revenues for 108 Southern California cities. “First, the San Gabriel Valley is becoming somewhat of a mature market. You can only absorb so many automobile retailers and shopping malls.”

During the last major recession, in 1981-82, San Gabriel Valley cities were expanding, de Llamas said. “There doesn’t seem to be the ability now to absorb the layoffs that there was 10 years ago,” he said.

Also, he said, the San Gabriel Valley is following national trends, with drops in auto sales and a flattening out of sales of “general merchandise,” anything from apparel to toys. Only sales by manufacturers, such as lumber or roofing supplies, have continued to climb, de Llamas said. “That’s because it doesn’t depend on the local population for sales,” he said.

Lloyd Gunderson, general manager of Gunderson Chevrolet in El Monte, said that the car business has been in decline since 1987 but that sales plummeted last December. “Thereafter we began to lose sales--about 15% by the end of March,” he said.

At least one other car dealer, however, sees a silver lining in the bad times. “There are an awful lot of old cars driving around now,” said John de l’Orme, general manager of Thorson Buick in Pasadena. “There has to be a pent-up demand out there.”

While they wait for demand to come back, most car dealers try to beef up their service and used-car business, comforting themselves with the thought that declines are just part of the business.

“You’re going to experience some intense downs in the automobile business,” Gunderson said. “It’s very recession-sensitive.”

In such cities as Duarte and Pomona, which are heavily reliant on auto dealers and retailers, prospects are for hefty budget deficits.

In Duarte--where four car dealerships shut down last year--sales taxes were down 40% in 1990 compared to 1989.

Pomona was particularly hard hit when Buffums department stores went out of business recently. The Pomona Buffums’ closing put 100 people out of work. Now, the city is facing a $5-million budget deficit for the next fiscal year, said City Administrator Julio Fuentes, and will almost certainly have to lay off employees.

Other cities are already in a “freeze” mode, leaving staff positions unfilled. For example, Baldwin Park has left open both an $80,000-a-year job as head of the community development department and a $70,000-a-year redevelopment director’s job, City Manager Donald Penman said.

Though the lack of malls and auto dealers is a sore point for Baldwin Park in boom times, it has at least cushioned the largely industrial city in the recession, Penman said. “We don’t have a single auto dealer or mall in town,” he said.

Perhaps the fiscally strongest San Gabriel Valley city is Pasadena, where sales tax revenues in the final quarter of 1990 increased almost 20% over the equivalent revenues in 1989.

City Finance Director Mary Bradley attributes the city’s strong showing to economic diversity and to a favorable ruling by the State Board of Equalization, giving the city a rich new source of sales tax revenue.

The board credited the city with sales tax revenues from Avon Products, which has headquarters in Pasadena. Before that decision last July, sales by Avon emissaries, who travel from city to city, were allocated to a state pool and distributed statewide.

It was an especially fortunate decision this year, Bradley added. “Take away Avon (revenues), and there would actually be a reduction in sales tax revenues,” she said.

In addition, Bradley said, Pasadena has both luxury and discount stores. “Bullock’s and Fedco--those two sectors have been fairly firm in California during the recession.” The city also has new development--notably, the Ritz-Carlton Huntington Hotel.

Despite the recession, there has been a dramatic turnaround recently in real estate sales in the San Gabriel Valley, real estate agents say.

Sales of single-family homes and condominiums for the first quarter of the year continued to reflect last year’s doldrums, with a 30% drop in the number of single-family homes sold and an almost 50% drop in condominium sales, even as prices were generally falling.

But for many real estate brokers, March and April were record-breaking months. “There was a lot of tire-kicking and hard looking for a few months,” said Maria DiMassa of Century 21 Lake Realty in Pasadena. “Then, for whatever reason, people actually started writing those offers in March and April.”

William Podley, president of the Pasadena-based Podley, Caughey & Doan Associates, said April was the best month in the history of his company. “My perception is that the (Persian Gulf) war had the single greatest impact on people’s house-buying confidence,” he said.

Others had similar perceptions, noting that house buying increased dramatically after the resolution of the war.

The difference between current buyers and those of the go-go years of the late 1980s, real estate agents note, is a new cautiousness. “People are being much more selective, because of market conditions,” said Fran Barrington-Dryden of Coldwell Banker in San Marino. “They want to get the best buys they can get.”

Added DiMassa: “People are not stretching beyond their means the way they were a few years ago. They’re saying, ‘$1,500 a month is my limit. I’m not going to count on a raise next year or on the overtime.’ Some buyers are qualified to buy more than they’re buying.”

Like the real estate business in other regions in Southern California, that of the San Gabriel Valley is being assisted by low interest rates, with fixed-rate mortgages available at as low as 9 1/4%.

But agents and brokers in the region say they also benefit from the continuing interest of Asian investors, some eastward moves by employers and a shrinking supply of housing and commercial space.

Office vacancy rates are down, particularly in Pasadena, from 13.1% during the first three months of 1990 to 9.4% during the same period this year. For one thing, the city’s landlords are benefiting from a spillover from Burbank and Glendale, said Kirby Greenlee, a broker for the national real estate firm Grubb & Ellis.

“There’s been a sort of tidal surge of tenants moving along the freeway from Burbank to Pasadena,” Greenlee said.

A 2-year-old growth control measure has begun to curb the availability of office space in Pasadena, Greenlee said, making existing space more desirable.

Office space in the rest of the San Gabriel Valley is also getting hot, said Amy Spring, another Grubb & Ellis broker. The vacancy rate in the region, outside of Pasadena, is about 20% now. “A year from today, it will probably be down in the mid-teens,” Spring said. “There’s been no new construction.”

Are the developments in real estate a hopeful sign? The experts aren’t sure. A concentration of real estate sales is not necessarily a sign of economic turnaround, said Cal Poly Pomona professor Galbreath.

“The total wealth of those people (who are now buying real estate) never disappeared,” Galbreath said. “While there was a drop (in real estate sales), the buyers didn’t fall off the edge of the earth. Prices stopped rising, the costs of ownership decreased some. That can pull out some of the people who could afford it.”

The buying boom may also be a reflection of the region’s construction dearth, builders say. Developers such as Tim Cantwell of Cantwell-Anderson in Altadena complain that there is little financing available for new projects. Most cities say that there has been a drastic drop-off in the past six months in fees for construction permits or for plan-checking.

“Things that were completely doable a year ago, you can’t get financing for now,” said Cantwell, citing a proposed shopping center at Lake Avenue and Orange Grove Boulevard in Pasadena.

Most economists predict that the downward trend of the economy will turn around during the second half of this year. “But there are no guarantees,” Galbreath said. “Saddam can burp again. What if something happened to Bush?”

In the meantime, ordinary San Gabriel Valley residents have been doing some belt-tightening of their own.

For example, half a dozen budget-minded supermarket shoppers gathered recently in an Altadena living room for a “coupon bee.” Coffee drinkers traded for 50-cent Folger’s and Maxwell House coupons, parents of small children went for the disposable diaper discounts and Frosted Flakes lovers exchanged with Wheaties fans.

“Why shouldn’t we do this?” said Bertha Brown, a Pomona teacher’s aide. “If you saw a quarter lying on the street, you’d bend over and pick it up, wouldn’t you?”

The most zealous among them, Altadena domestic worker Bobbie Thomas, boasted that she has file cabinets full of coupons, including some mailed to her by relatives in Oakland. By using her coupons during supermarket bargain days, she said, she can whittle a $65 grocery bill down to $15.

“I’m a coupon-aholic,” she said.

Shoppers are using 60% to 80% more coupons this year, said Tony Khoury, manager of Ralphs Supermarket on Lake Avenue in Pasadena. “It used to be that men couldn’t care less about coupons,” he said. “But men are using them, too.”

Other residents are engaging in more traditional kinds of recession behavior. “There are two things people never deny themselves, even in a depression--sex and alcoholic beverages,” said Tracy Miller, owner of Happy’s Liquor Store in Sierra Madre.

Miller can testify to the truth of part of that adage. Liquor, he said, is selling briskly.

RECESSION IN SAN GABRIEL VALLEY: A SPECIAL REPORT Maybe it’s not a knockout punch, but the recession of 1990-91 is hurting the San Gabriel Valley.

Unemployment is up. More people are signing up for welfare--including a 33% jump in the general relief rolls. Sales tax revenues for the region’s 29 incorporated cities have inched up--but not anywhere near enough

to compensate for inflation. House prices and sales have been down, although real estate agents report a recent home-buying boom. Maybe because of its diversity and its location, the San Gabriel Valley is faring a little better than other parts of the county. But recovery still could be a long, slow process. Today we begin an occasional series on the recession’s impact on the San Gabriel Valley.

Spending

Consumer spending was off. While gross retail sales were up in the fourth quarter of 1990 compared to the same quarter of 1989, they were up by only 1.6%. Because that is not enough to match the inflation rate of 6.1%, it is considered a decrease. Oct.-Dec. ’89 $2,999,419,000 Oct.-Dec. ’90 $3,049,735,000 % change: 1.7 Source: Hinderliter, de Llamas & Associates Employment

Unemployment increased throughout the San Gabriel Valley between February 1989 and February 1991. However, the unemployment rate remained below the countywide rate of 7.4%.

Unemployment Rate

‘89 ’91 3.7 6.2

Employed

‘89 ’91 521,731 543,507

Unemployed

‘89 ’91 20,269 36,253

Source: California Employment Development Department, Employment Data and Research Division

Public Assistance

As unemployment increased, so did the number of people seeking government help to make ends meet. The San Gabriel Valley saw increases in the number of people receiving Aid to Families with Dependent Children, General Relief and Food Stamps, with General Relief cases increasing by about one-third. The figures compare September 1989 and December 1990.

AFDC

‘89 ’90 83,175 93,046

General Relief

‘89 ’90 3,060 4,075

Food Stamps

‘89 ’90 10,988 11,779

Source: L.A. County Department of Public Social Services

Home Sales

Nervousness about the economy stalled home sales, with the number of homes sold dropping. A comparison of first quarter sales of single-family homes in 1990 and 1991 shows the median price dipped as well. 1st Qtr Median Price

‘90 ’91 $201,310 $192,080

1st Qtr Sold

‘90 ’91 3,656 2,551

Source: Dataquick Information Systems

Home Sales

Sales figures reflect a wet-blanket real estate market, with a 30% drop in the number of single-family residences sold in the first quarter of 1991 compared to the first quarter of 1990, and an almost 50% drop in the number of condominiums sold. Despite jumps in condo prices in both the east and west ends of the region, home prices were generally down. But the chart doesn’t reflect what real estate agents are describing as the current mini-boom in the region.

Zone 1: Altadena, Arcadia, La Canada Flintridge, Pasadena, San Marino, Sierra Madre, South Pasadena

Zone 2: Alhambra, Boyle Heights, City Terrace, El Monte, Highland Park,

Lincoln Heights, Monterey Park, San Gabriel, South El Monte, Temple City

Zone 3: Azusa, Baldwin Park, Bradbury, Covina, Duarte, Glendora, Irwindale, Monrovia

Zone 4: Industry, Diamond Bar, La Puente, Walnut, West Covina

Zone 5: Claremont, La Verne, Pomona, San Dimas SINGLE FAMILY HOMES

1Qtr 89 1Qtr 89 1Qtr 90 1Qtr 90 1Qtr 91 1Qtr 91 Zone $ Median Sold $ Median Sold $ Median Sold 1 $290,000 782 $340,000 637 $296,000 495 2 $175,000 1,076 $198,000 822 $186,000 592 3 $150,000 832 $171,000 643 $168,000 436 4 $173,000 1,404 $200,000 941 $196,000 634 5 $145,000 670 $137,000 613 $155,000 394

CONDOS

1Qtr 89 1Qtr 89 1Qtr 90 1Qtr 90 1Qtr 91 1Qtr 91 Zone $ Median Sold $ Median Sold $ Median Sold 1 $146,000 104 $151,000 129 $167,000 85 2 $122,000 111 $162,000 210 $158,000 96 3 $102,000 135 $125,000 157 $127,000 88 4 $108,000 149 $134,000 239 $126,000 114 5 $136,000 32 $89,000 83 $111,000 33

Source: Dataquick Information Systems

PUBLIC ASSISTANCE

Three principal welfare programs administered by Los Angeles County are Aid to Families with Dependent Children (AFDC), General Relief and Food Stamps. AFDC is paid to parents of minor children. General Relief is a $312 monthly payment that goes to single adults who do not qualify for other forms of government aid. Food stamps are usually issued in conjunction with the other welfare programs. The figures show across-the-board increases in most San Gabriel Valley communities, with General Relief cases increasing by a third.

AFDC General Relief Food Stamps City ’89 ’90 ’89 ’90 ’89 ’90 Alhambra 7,353 8,349 189 278 764 1,042 Arcadia 472 560 16 20 64 68 Azusa 2,423 2,765 56 55 379 396 Baldwin Park 5,719 6,259 129 186 907 869 Bradbury 0 2 0 0 0 2 Claremont 420 806 9 24 64 67 Covina 1,334 1,543 48 52 123 155 Diamond Bar 257 358 2 29 8 28 Duarte 927 939 31 40 104 86 El Monte 11,156 12,882 347 381 1,653 1,816 Glendora 717 746 27 40 47 56 Industry 34 41 2 0 5 4 Irwindale 74 118 2 7 3 0 La Puente 3,250 3,423 51 84 439 431 La Verne 591 648 17 33 85 113 Monrovia 2,209 2,382 89 81 287 304 Monterey Park 5,851 6,431 165 240 698 677 Pasadena 9,222 9,534 724 927 1,257 1,305 Pomona 13,047 13,541 511 618 1,868 1,880 Rosemead 7,468 9,185 196 276 870 1,081 San Dimas 583 573 7 17 48 65 San Gabriel 3,021 3,731 96 136 334 363 San Marino 5 5 1 1 1 2 Sierra Madre 107 101 8 3 14 8 S. El Monte 2,373 2,614 78 85 346 365 S. Pasadena 237 271 12 13 41 27 Temple City 885 1,031 162 294 122 114 Walnut 169 259 5 19 41 28 West Covina 3,271 3,949 80 136 416 427 S. Gabriel Valley 83,175 93,046 3,060 4,075 10,988 11,779 County 555,341 638,987 48,898 56,378 78,707 91,520

Figures are estimates from September of 1989 and December of 1990

Source: Los Angeles County Department of Public Social Services

Employment

Though unemployment is up in all communities in the San Gabriel Valley, the region has clearly not been hit as hard as the county as a whole. Only six San Gabriel Valley cities--Azusa, Baldwin Park, El Monte, La Puente, Pomona and Rosemead--showed unemployment rates that exceeded the county rate of 7.4%. At the same time, the number of employed people in the area increased by almost 22,000, or 4%. The figures here compare February 1989 to February 1991.

City Employed Unemployed Rate 89/91 89/91 89/91 Alhambra 35,433/36,912 1,060/1,895 2.9/4.9 Arcadia 26,263/27,359 524/937 2.0/3.3 Azusa 15,259/15,896 728/1,302 4.6/7.6 Baldwin Park 21,901/22,815 1,335/2,388 5.7/9.5 Bradbury N/A N/A N/A Claremont 17,217/17,936 495/886 2.8/4.7 Covina 19,784/20,610 601/1,074 2.9/5.0 Diamond Bar 16,226/16,903 402/719 2.4/4.1 Duarte N/A N/A N/A El Monte 35,208/36,678 2,356/4,214 6.3/10.3 Glendora 22,088/23,010 652/1,166 2.9/4.8 Industry N/A N/A N/A Irwindale N/A N/A N/A La Puente 14,707/15,321 713/1,276 4.6/7.7 La Verne 12,697/13,227 320/573 2.5/4.2 Monrovia 16,632/17,326 756/1,352 4.3/7.2 Monterey Park 29,386/30,613 1,001/1,790 3.3/5.5 Pasadena 64,225/66,906 2,356/4,214 3.5/5.9 Pomona 42,057/43,812 2,469/4,416 5.5/9.2 Rosemead 19,716/20,538 947/1,694 4.6/7.6 San Dimas 13,557/14,123 410/734 2.9/4.9 San Gabriel 15,555/16,204 593/1,061 3.7/6.1 San Marino 6,217/6,476 83/148 1.3/2.2 Sierra Madre 6,974/7,265 158/282 2.2/3.7 South El Monte N/A N/A N/A South Pasadena N/A N/A N/A Temple City 15,687/16,341 402/719 2.5/4.2 Walnut 6,890/7,178 196/351 2.8/4.7 West Covina 48,052/50,058 1,712/3,062 3.4/5.8 SAN GABRIEL VALLEY 521,731/543,507 20,269/36,253 3.7/6.2 COUNTY 3,982,770/4,149,000 183,949/329,000 4.4/7.4

Source: California Employment Development Department, Employment Data and Research Division

Consumer Spending

Figures, expressed in thousands, show the total sales that occurred in each city, of which 6 percent was paid to the state in sales taxes. Inflation, as measured by the consumer price index, was 6.1% in 1990, so any year-to-year increase of less than that reflects a decline, in real terms, of consumer spending and in sales taxes paid. The State Board of Equalization returns 1% of total retail sales to each city.

Oct.-Dec. Oct.-Dec. % Change City 1989 1990 Alhambra 181,002 189,065 4.4 Arcadia 140,515 129,445 -7.8 Azusa 84,461 80,839 -4.2 Baldwin Park 55,894 53,684 -3.9 Bradbury 117 114 -2.6 Claremont 52,626 55,486 5.4 Covina 143,120 145,930 1.9 Diamond Bar 51,016 51,940 1.8 Duarte 37,883 25,029 -34.0 El Monte 200,855 209,851 4.5 Glendora 62,997 65,151 3.4 Industry 437,719 438,343 0.1 Irwindale 66,444 59,083 -11.1 La Puente 33,855 28,203 -16.7 La Verne 45,895 46,928 2.2 Monrovia 98,073 103,180 5.2 Monterey Park 83,965 85,021 1.2 Pasadena 446,379 533,503 19.5 Pomona 185,881 182,262 -1.9 Rosemead 84,823 76,398 -9.9 San Dimas 50,680 44,512 -12.2 San Gabriel 63,676 63,501 -0.2 San Marino 10,046 9,028 -10.1 Sierra Madre 4,410 4,863 10.3 South El Monte 76,780 74,504 -2.9 South Pasadena 25,669 29,376 14.4 Temple City 32,968 35,220 6.8 Walnut 20,746 21,282 2.6 West Covina 220,924 207,994 -5.8 TOTALS 2,999,419 3,049,735 1.7

Source: Hinderliter, de Llamas & Associates

Next Week

The recent announcement of a Nordstrom department store for the Santa Anita Fashion Park in Arcadia shows the recession hasn’t crippled the San Gabriel Valley’s five major shopping malls. Most proceeded with development plans that had been in the works for years. After double-digit sales increases during the first six months of 1990, though, sales were down for the second half of the year, reflecting what mall operators say was consumer unease over the Persian Gulf War. But like the war, the downtime was short. Mall operators say sales appear to be increasing.