Cities, Like People, Feel Pinch of Hard Times : Economy: Sales and sales tax revenues are down; unemployment and welfare rolls are up.


For the first time in decades, fiscally conservative Glendale--which once considered itself impervious to the whimsical ills of the nation's economy--is being hurt by a recession.

Tax revenues have declined in almost every area. Spending has to be cut, but officials do not yet know where, or how much. A city hiring freeze imposed last month may not be enough to balance a teetering budget that is falling millions of dollars short.

"We are making every effort to stem expenses, but that is difficult to do without Draconian measures," city Finance Director Brian Butler said.

It was just six or seven months back that economists were talking about the imminent "bottoming out" of the recession of 1991. But despite a bright spot or two, the indicators continue to be as grindingly gloomy in Glendale--and throughout the San Gabriel Valley--as they have been in other parts of California and the nation.

Unemployment is up and the welfare rolls are growing as a result. Sales are off and city governments are going through contortions to stay afloat. Requests for help from charitable organizations are much higher than last year, say advocates for the poor and the homeless.

A lot of people still await a sign that a turnaround is somewhere down the road.

"I haven't seen any change yet," said Lynne Best, who was laid off from two jobs in the last 18 months.

The 45-year-old Temple City resident worked in an industry that is particularly vulnerable to recession.

"The last thing people buy when hard times hit is insurance," said Best, who finally found a job in September as a church secretary--but at $1,000 a month less than she had been making.

"All year I kept hoping that I'd get back into a decent-paying job, but it never happened," she said.

Gail Farnsworth, 49, of Glendale, landed in the same boat on Nov. 15. That is the day she was replaced as executive secretary of an insurance company by two part-time workers, who are being paid half her salary and receive no medical benefits.

"I don't look forward to going out and looking for a job," said Farnsworth, who had long-postponed foot surgery done before her medical insurance expired Nov. 30. Now on crutches, she will lose her disability pay in February.

The conditions of the local economy are mirrored in the ailing Glendale city budget:

--Sales tax revenues are 16% below projections, based on predictions a year ago that the economy would soon pull out of the doldrums. Actual revenues are 4% less than last year--the first such decrease in revenues he has seen, said Butler, who has been with the city for more than 15 years.

--Building permit fees, which reflect all new construction, including remodelings, are almost half as many as projected--a 39% decline from last year.

--Property transfer taxes, a monitor of real estate activity, are down by 60%.

--Interest earnings on city investments are expected to drop 28%--$2 million below expectations.

It all means that Glendale will fall significantly short of its budgeted $82.6 million in general fund revenues.

"Historically, Glendale had considered itself immune from the rest of California, or the rest of the country, in terms of revenue receipts" because of its diversity, Butler said.

But not in this stubborn economy, which has been hit hard everywhere.

Business interests in the region still rail about gloom-and-doom scenarios portrayed in newspaper articles and on television.

"What about the 93% of the work force that still has jobs?" asked Bruce Ackerman, executive director of the Pasadena Chamber of Commerce. "The money hasn't all dried up. It amazes me to see how much is said (about recession) in the media."

Nevertheless, joblessness has increased across the board in the region's cities, with even upscale San Marino edging up to 2.5% unemployed, from 1.9% last year.

Unemployment in Glendale and the foothill communities is still comfortably below the Los Angeles city average of 7.8%, but also rising. The rate in Glendale has inched up from 2.8% in 1989 to 4.2% last year and a current 5.3%. The affluent community of La Canada Flintridge has an unemployment rate of 3.4% and the rate in La Crescenta and Montrose is 3.9%.

Among one of the most depressed areas in the county is Atwater Village, with an unemployment rate of 11.3%, according to the state Employment Development Department.

Much of the rising unemployment stems from mergers and cutbacks by area businesses.

Glendale and neighboring communities, where finance and insurance institutions predominate, may be in for even harder times. Security Pacific Bank, for instance, which has service headquarters in Glendale, will merge next spring with Bank of America, and massive layoffs are forecast.

Other major employers in the area, such as General Dynamics, the Pomona-based missile-maker, are scaling back too. The plant's present complement of 4,500 workers will be cut to about 4,000 next year, said spokesman Eric Solander. Four years ago, the company employed 10,800 at its Pomona and Rancho Cucamonga plants. By August, 1990, when the company consolidated into one facility in Pomona, they were down to 7,400 workers.

With unemployment comes poverty and homelessness, say area advocates for the poor.

The number of clients seeking aid from the Glendale Red Cross chapter has doubled in the last few months, said Norge Seward, director of emergency services for the agency.

"We're talking about whole families that have lost their jobs and now they are being evicted because their unemployment benefits have run out," she said. "I've never seen it this bad," said Seward, who has worked in social services in Glendale for more than seven years. "It's horrible."

The Salvation Army's Pasadena Tabernacle had to call for emergency donations in order to accommodate all the families requesting Christmas dinner baskets and toys.

"We had people who were givers last year coming in for assistance this year," said business director John Jones.

Retailers are hurting too. Sales in area stores continue to fade, with the predictable exception of such recession-immune items as books, or do-it-yourself home improvement materials.

Coming off a record year of $352.2 million in sales 1990, the Glendale Galleria appears to be in its first down year since the sprawling mall opened in 1976, city officials said. Though figures are not yet available for sales volume in the last six months of the year, sales in the first half fell 8.6% below the pace of the same period last year, according to city records.

The car business has been as cold locally as anyone can remember. Car sales in Glendale plummeted from $140 million during the first six months of 1990 to about $92 million in the same period this year, Butler said.

For John Morrison, a Glendale car dealer, the bad times have turned into a depression. In 1987, he owned seven franchises, employed 300 workers and sold about 300 to 400 cars a month. Now he operates four franchises, manages 125 employees and sells about 100 cars a month. "There's no quick fix," said Morrison, who estimates about one-third of the Southland's car business has gone bankrupt.

Car-related services such as auto body repair, parts and supplies also have dropped. "People are refusing to do preventive maintenance," Morrison said.

The real estate business, a longtime sign of prosperity in the region, has been slow. A mini-boom that hit much of the area last spring, particularly in the western San Gabriel Valley, appears to have flattened out.

In Pasadena, for example, real estate brokers had closed on 1,107 single-family and condominium units by the end of November last year. Closings through November of this year were just 1,000.

"The buyers are there, but they're willing to step up to the table only if they see a truly attractive value," said William Podley, president of Pasadena-based Podley, Caughey & Doan Associates.

Home sales in Glendale were only slightly better in the last six months compared with the same period a year ago, when sales had dropped dramatically, according to the Glendale Board of Realtors. The average price of homes sold declined from $339,600 in 1989 to a current $303,700.

There are some bright spots in the Glendale-Pasadena area. The most significant has been the market for office space.

The Burbank-to-Pasadena corridor represents "probably the best market in Southern California" for office space, said Kirby Greenlee, a broker for the national real estate firm of Grubb & Ellis.

An expansion-minded entertainment industry and a shortage of office buildings because of local growth restrictions have kept vacancy rates down, Greenlee said. The rate is 10% now in Pasadena; 15% in Glendale. "The demand is still there," Greenlee said. "In other markets, there's no demand at all."

Some types of businesses continue to do well in spite of the recession. For instance, bookstores consider themselves "recession resistant," said Dana Ditman, senior manager at Crown Books in Glendale, which recently relocated into a greatly expanded facility. Ditman said the store is unusual compared to most businesses because books continue to sell during recessionary periods, often because buyers perceive that they are getting greater value for educational materials at an affordable cost.

Suppliers of do-it-yourself materials also say that business has remained fairly steady. Kevin Strauch, owner of Eagle Rock Lumber & Hardware, a business that has catered to home-repair customers for more than 75 years, said sales during the holiday period are down by about 5%. However, he said business overall for the year has picked up slightly from last year.

Times staff writer Sherry Joe contributed to this story.

Glendale Unemployment Rates Unemployment is up almost everywhere in the greater Los Angeles area, according to a comparison of the October unemployment rates in 1989 , 1990 and 1991 .

Cities 1989 1990 1991 Los Angeles 4.2% 6.2% 7.8% Atwater 8.5 10.0 11.3 Glendale 2.8 4.2 5.3 La Canada Flintridge 1.8 2.7 3.4 La Crescenta-Montrose 2.1 3.1 3.9

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

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