REBUILDING L.A. : Private Sector Is Crucial to the Rejuvenation Effort : Economy: But business’ record in developing the area has left a lot to be desired. Firms have been leaving for decades.

One week after the Los Angeles riots broke out, Southern California Edison reached into its corporate pockets and came up with a handful: $35 million for job training and other help for troubled neighborhoods in its sprawling service area.

“There isn’t a business in the country that doesn’t depend on a healthy society,” explained John E. Bryson, chairman of the utility that provides electricity to much of Southern California outside the Los Angeles city limits.

“Our economic health,” he added in an interview, “depends on the economic health of the area.”

But the chairman might have put it the other way around: The future vitality of riot-damaged neighborhoods, by virtually all accounts, will depend on an outpouring of investment from the private sector. This is a basic tenet of the Rebuild L.A. task force, headed by Peter V. Ueberroth, and is at the heart of President Bush’s proposal for new zones of enterprise in the nation’s dilapidated urban centers.

Yet corporate America’s track record would give pause to anyone who expects a dramatic surge in commitments to rundown inner cities, despite hefty pledges by Edison and some others.

In Los Angeles and elsewhere, better-paying employers have been migrating out of the urban core for decades, often to new industrial parks in leafy suburbs, sometimes out of the country altogether. Banks and insurance companies long have been accused of discriminating against poor neighborhoods, making it that much harder for new enterprise to blossom.

Even in charity, corporate contributions failed to keep up with inflation between 1985 and 1990, according to the Southern California Assn. for Philanthropy, reflecting economic woes, such as the squeeze on aerospace.

“What do I think is likely to happen? Nothing,” said Richard D. Bingham, a specialist in urban economic development at Cleveland State University. “I think the dollars that will be invested in the inner city of Los Angeles will be so miserly compared to the size of the problem that, overall, the problem won’t be affected.”

In just the last few years, Los Angeles’ employment base has been eroded by shifts and consolidations that have rocked banking, aerospace and other industries. Even earlier, a procession of major manufacturers in the auto and other fields abandoned the region, removing thousands of good jobs from the reach of urban workers.

Yet in some cases, advocates of the inner city argue that corporate executives exploit the vulnerable area, charging too much for their services and giving back little.

“African-Americans deposit money into these institutions (banks), and the money finances projects in other communities,” complained Carl L. McGill, executive director of the Black Chamber of Commerce of Los Angeles County.

McGill, a police officer who also runs a security agency, says blacks should invest their money in black-owned financial institutions, rather than support white-run banks that have provided little help to the inner city.

Certainly, the Los Angeles riots prompted a wave of soul searching and a whole series of new initiatives, barely after the smoke had cleared.

The AFL-CIO, for instance, said it will invest up to $75 million of its pension assets in construction projects to help rebuild. “We want to send a message--you can’t walk away from places like L.A.,” said Stephen Coyle, head of the federation’s pension investment program.

The AFL-CIO plan was something of an exception: Most of the large commitments, by contrast, were from enterprises whose future is linked inextricably to the ups and downs of Los Angeles.

Southern California Gas Co. is putting together a $40-million effort that will stress training. Bank of America and First Interstate have unveiled plans to provide millions of dollars in credit for the owners of damaged businesses.

Rebuild L.A., the group that will spearhead restoration efforts, has received more than 6,000 offers of help from individuals and companies, according to a database being kept by Arthur Andersen & Co., the accounting firm.

“They should do what works for them, what’s profitable for them, what fits their long-term goals,” Ueberroth said of corporate investors who might consider a stake in the city. “But they shouldn’t ignore it.”

If corporate executives were to heed those words, it would be a drastic about-face from the past. Even Ueberroth conceded: “The truth about the private sector is that they have avoided the center cities of America--clearly, positively, surely--and almost without exception.”

Consider Zenith Equipment, a maker of conveyor systems used in airports and warehouses. The firm was located for seven years in Vernon, near downtown Los Angeles. But faced with a rent hike into the range of $14,000 a month, it found more appealing terrain last year in San Bernardino County.

Such choices, while not good news for the inner city, aren’t hard to understand either.

“We found a building out here with beautiful office space, a larger manufacturing shop, in a business center all plush and green--and we pay less rent,” Helen Fields, controller of Zenith Equipment, said in her new office in Rancho Cucamonga.

The move of the 25-employee company was not unique. Between 1985 and 1990, Los Angeles County lost 29,000 manufacturing jobs, according to state and federal labor officials, reflecting the declining competitiveness of the urban core. Riverside and San Bernardino counties, meanwhile, gained more than 18,000 manufacturing jobs; Orange County added 8,100.

Advocates of revitalizing Los Angeles must make the case that healthy urban centers are in everybody’s long-term interest; that, as Ueberroth says, vital inner cities are good for business.

Yet corporate America is known--and often criticized for--its short-term profit ethic and lack of attention to strategic concerns that might have time horizons of years or even decades.

Thus some ask how riot-damaged areas can be expected to lure new employers, given fears of crime and a local labor force often deficient in basic workplace skills.

“The labor force obviously is risky. Insurance costs are high. Parking is often scarce and dangerous,” says Peter K. Eisinger, a political scientist at the University of Wisconsin. “For a bunch of reasons, big players in the private sector aren’t going to be interested in moving into the inner city.”

On top of all that, paltry job growth in recent years has given employers the luxury of being choosy about where they set up shop, and great leverage over local officials that compete to have them.

In light of that reality, some experts suggest that efforts to boost the inner city’s economy focus on training, hiring and transportation--to help residents get jobs and hold onto them--rather than wasting effort trying to move plants around.

Others say that transforming rundown areas in a lasting way requires programs of a scale that only the federal government can take on, and that it is unrealistic to expect too much from profit-oriented investors.

President Bush proposes tax benefits for employers who locate in distressed neighborhoods known as “urban enterprise zones.” Yet it isn’t clear how such tax breaks would help fledgling firms that have little income in the first place. Nor is there agreement on how to pay for such tax breaks, given the serious budget woes at all levels of government.

Transforming the impoverished neighborhoods of Los Angeles is complicated by yet other factors: Much of Southern California has become less competitive for new employers, a problem that transcends the riot areas. The state is widely criticized for high costs of labor and land and burdensome red tape, symbolized by a workers’ compensation system that has become a cause celebre among business lobbyists in Sacramento.

Before becoming chairman of Rebuild L.A., Ueberroth headed a state panel that looked into these problems, concluding: “Small and medium-sized businesses, which are the real creators of new jobs . . . are being discouraged, harassed, shut down and driven off.”

In light of such recent history, a growing number of voices are asking if Los Angeles can marshal the entrepreneurial spirit and imagination to meet perhaps its toughest challenge of all: Transforming a city sorely divided between haves and have nots into something better than it was before, with new hope and opportunity in its most downtrodden pockets.