Vernon Redevelopment Plan Is Sticky Business : Government: Industrial town is pushing a $500-million renewal plan. But some critics talk of private deals for big companies and extra benefits for the mayor.

Vernon has long thrived as an anomaly, Los Angeles County’s most industrial city with a daytime population of 51,000 and a nighttime population of 152.

But like other industrial cities throughout the United States, Vernon is trying to adapt to a rapidly changing economy--and its proposed solutions are generating legal action and talk of private deals for big business and the mayor.

City officials are pushing a massive redevelopment plan that would pump $500 million in property taxes into public improvements. But Los Angeles County, in a lawsuit filed to block the plan, contends that businesses that would benefit ought to pay the costs. Other critics note that Mayor Leonis Malburg owns 19 parcels within the redevelopment area and could benefit from soaring land values if the project is approved.

“This would be an outrageous example of using redevelopment law for private gain,” said Mike Davis, who teaches urban theory at the Southern California Institute of Architecture and is the author of “City of Quartz,” a modern history of Los Angeles. “A small group of individuals and a handful of companies, including some very wealthy ones, would be making a big profit from public funding.”

This kind of controversy has been a recurring theme in Vernon, a tiny industrial enclave four miles southeast of downtown, where the handful of residents have little clout and politicians and business leaders call the shots.

But conditions have changed dramatically in recent years. About 15,000 blue-collar jobs have disappeared in Vernon during the past decade, city officials estimate, and in just the last 18 months more than 60 companies have moved out. “For sale” and “for lease” signs are now nailed to almost 10% of the city’s commercial buildings.

Factories have folded because of foreign competition or as a result of leveraged buyouts. Some moved to other states or out of the country in search of cheap labor; others relocated to avoid California’s strict environmental regulations. Even some garment manufacturers--once seen as the saviors of Vernon’s industrial decline--have begun to abandon the area.

Vernon is a city unlike any other in the county. On a recent morning, a line of slatted livestock rail cars filled with squealing pigs rumbled across the tracks as Los Angeles’ skyline shimmered in the distance.

In a city dominated by rusting smokestacks and bustling factories, Vernon’s best-known landmark is a mural that encircles a meat-packing company, depicting meadows, meandering streams and 200 pigs.

Otherwise, there are few patches of greenery, lawns or trees. This is a bleak urban sprawl, five square miles of denuded landscape filled with boxy-looking buildings where workers construct furniture, slaughter steers, recycle grease, make hot dogs and manufacture products from cans to carburetors to cardboard boxes.

Vernon officials have declared a large section of the city “blighted,” a requirement for it to receive redevelopment tax breaks. Under California law, redevelopment agencies can keep all property taxes generated by new construction within a renewal area.

But the county counsel and the California Community Colleges, which also joined the suit against Vernon, say this is an illegal tax grab. California redevelopment law was enacted to help aging cities rebuild slum areas. While there are some abandoned and aging buildings in the area, “it’s certainly not blighted by any means,” said county counsel Manuel Valenzuela.

The county has sued other cities for trying to use redevelopment funds where blight was in question. But this is the first time in recent years, Valenzuela said, that a city has tried to obtain redevelopment money for an exclusively industrial area.

Residents in neighboring cities have mixed feelings about Vernon’s redevelopment plans. Most are eager for new jobs, but they also are wary about the kind of companies that Vernon might attract.

Several years ago, a consumer group ranked Vernon as the county’s worst polluter among cities that release airborne hazardous chemicals. Other proposed projects that would have released even more toxic chemicals have created tremendous opposition in neighboring cities.

Plans to build a hazardous waste treatment plant in Vernon, within 1,000 feet of a high school in Huntington Park, were abandoned late last month after years of protest by neighbors and local legislators. And a proposal to build the state’s first toxic-waste incinerator in Vernon also has stalled after community opposition.

“Vernon has a bad track record and doesn’t seem to care much about the health of its neighbors,” said Ric Loya, a city councilman in Huntington Park, a community adjacent to Vernon. “I wouldn’t be surprised if one day they tried to spring a nuclear power plant on us.”

But Gerald Forde, who heads Vernon’s redevelopment project, contends that rebuilding sections of the city with redevelopment funds will only help neighboring communities by creating jobs.

Vernon wants to use the redevelopment benefits to make public improvements in 60% of the city and would include widening streets, building parking structures and rebuilding manufacturing centers and other public improvements, Forde said. This would make Vernon a better place to do business, he said, and would help the city attract new firms and discourage businesses from relocating.

“The loss of jobs is one of the biggest problems this state is facing,” Forde said. “We’re trying to reposition our city so we can stop companies from leaving and also attract new jobs. A lot of people in L.A. would benefit from this plan . . . not just Vernon.”

Vernon was founded in 1905, as a solely industrial city, and since its inception it has remained true to the community’s motto: Exclusively Industrial. But after decades as a thriving manufacturing center, heavy industry in the city began to decline in the early 1980s. A number of major plants closed, including Bethlehem Steel’s massive operation.

Vernon was able to attract different kinds of industries to the area, including light manufacturing firms, apparel companies, ethnic food processing plants and hazardous waste recycling facilities. But there still was a net loss of jobs and companies.

“Vernon was transformed during the 1980s from the premier non-defense industrial district of Los Angeles County to an area filled with sweatshops and other smaller scale businesses,” said Mike Davis, who is writing a book about the industrial cities in southeast Los Angeles. “Now the area’s being transformed again.”

If the city succeeds in its attempts to obtain redevelopment funds, the mayor and large companies such as Santa Fe Land Improvement Co., which owns 41 parcels in the redevelopment area, will see their property values soar, Davis said.

Malburg’s property includes one of the community’s four restaurants, in addition to factories, warehouses and industrial sites. Most of them have been owned by his family for more than 30 years, Malburg said.

“I don’t feel there’s any conflict of interest because I didn’t vote on any issue where redevelopment was involved,” Malburg said. “The city attorney advised me to abstain on the issue . . . and I did.”

The new industries Vernon hopes to attract could bring even more pollution to the area, but few residents--all city employees--are willing to speak out against the plan. They live in the town’s 32 housing units, receive subsidized rents--as little as $50 a month--for small stucco houses in the shadow of warehouses and factories. All residents must be approved by the City Council.

So it is no mystery that there is little political activism in this town. With the exception of one member, the same City Council has remained in power since 1974. Malburg has been a member of the council since 1956.

Still, controversy has been no stranger at Vernon City Hall. City Administrator Bruce Malkenhorst makes more than $200,000 a year and is the highest-paid city official in California. Yet, while authorizing his own pay raises he has cut the size of the city’s Police and Fire departments in half.

Malkenhorst was indicted, along with Malburg, in the late 1970s for alleged election improprieties. A political opponent of the Administration claimed, among other things, that the mayor did not live in the city. The mayor owns a large home in Hancock Park, but claims that his legal residence is a suite in a Vernon office tower. The mayor and other city officials were reelected after the grand jury indictment and they were cleared in court.

Malburg’s grandfather, John Leonis, also was indicted 30 years earlier for voter fraud because he allegedly lived at the Hancock Park address rather than in Vernon. But the indictment was dismissed for insufficient evidence.

Forde contends that Vernon has been unfairly maligned. “People have taken a lot of potshots at Vernon over the years,” he said. “Some of the criticism is because we’re an industrial town . . . so we’re not going to be as clean and nice to look at as some office buildings or retail centers. But we fill a void in this county and provide a home for industries that residential areas don’t want.”

The View From Vernon

The community of Vernon, four miles southeast of Los Angeles, is almost exclusively industrial and has the smallest residential population of any incorporated city in the state.

* Full-Time Residents: 152

* Daytime Population: 51,000 (including workers).

* Total Businesses: 1,551

* Large Firms: 150 companies wit more than 100 employees.

* Types of Businesses: A mix of heavy and light industrial manufacturing.

* Businesses Lost: 60 have left in last 18 months.

* Founded: 1905

* Named After: George R. Vernon, a Civil War hero and one of the area’s earliest settlers.