L.A. May Need $6 Billion to Rebuild, Analyst Says : Recovery: Estimate calls for creation of up to 94,000 jobs, far more than proposed by Ueberroth.


An investment of about $6 billion and the creation of 75,000 to 94,000 jobs are needed to revitalize the economy of Los Angeles’ neglected areas, a management consultant for Rebuild L.A. told the organization’s board of directors at its first meeting Tuesday.

The estimates by Robert D. Taylor of McKinsey & Co. presented a challenge even larger than Rebuild L.A. co-chairman Peter V. Ueberroth has described in interviews. Earlier this month, Uebberoth said 57,000 jobs must be created in poor neighborhoods in the wake of the riots.

Taylor emphasized that his figures were tentative and might be revised in coming months. However, he said that if the objectives were achieved, there would be a multiplying effect that would generate thousands of more jobs. He said more than 25% of the county’s population--2.5 million people--live in “neglected areas.”


Taylor’s call for massive job creation in the inner city comes as Los Angeles County’s economy is hemorrhaging from the loss of 208,000 jobs in 1991 alone and the state as a whole is mired in the deepest economic downturn since the Great Depression.

Nonetheless, Taylor said that the goals are achievable over the next five years.

“It is not overwhelming,” he said. As to the $6 billion investment, he said: “This is about leadership choices. California’s share of the savings and loan bailout already is $11 billion.”

McKinsey has been commissioned by Rebuild L.A. to study the Los Angeles economy with the goal of developing strategies for the organization.

Taylor made the longest presentation at the board meeting, after Ueberroth, Mayor Tom Bradley and Gov. Pete Wilson made welcoming remarks to the 67-member panel which convened at the Los Angeles County Museum of Natural History. As yet, said Taylor, who also is a member of the Rebuild L.A. board, there is no fully developed plan for meeting those objectives.

The meeting was held just hours after Ueberroth, made 18 more appointments to the urban revitalization group’s massive board.

In another significant development, Ueberroth told the board that he had named two men to join him as co-chairs: Bernard Kinsey, the black executive who is Rebuild L.A.’s chief operating officer, and Barry Sanders, a white partner in Latham & Watkins, one of the city’s most politically influential law firms.


Sanders has longstanding ties to Ueberroth. He served as a lawyer for the Los Angeles Olympics Organizing Committee, which Ueberroth headed. And he was executive director of the Council on California Competitiveness, the Ueberroth-chaired council that issued a stinging report on the state’s economy last April.

On Tuesday, Sanders said he thought it was critical for the council’s recommendations on workers compensation reform and regulatory streamlining to be achieved if a climate was to be fostered that would facilitate Rebuild L.A.’s work.

Ueberroth told board members that the chairman’s job was truly daunting, adding that he still may name two more co-chairs. Last month, he said at a press conference that he was considering naming several minority group members to such posts.

Ueberroth said that “a lot of what we’ve done in the first 12 weeks is damage control.” He said there had been numerous successes in convincing companies not to leave Los Angeles and persuading various organizations not to cancel conventions, but he did not provide specifics.

Although Ueberroth has said that the board primarily will play an advisory role, the competition to land spots on the panel has been intense. Hundreds of persons have been recommended and Ueberroth has been under pressure to appoint people aligned with rival political figures in the city.

The new board members named Tuesday include C. Michael Armstrong, Hughes Aircraft chief executive officer; Jane Small, president of the Los Angeles County Commission on Disabilities; Helen Bernstein, president of the United Teachers of Los Angeles; Monterey Park City Councilwoman Judy Chu; Yang Il Kim, national president of the Korean American Grocers Assn., whose market in the Pico-La Brea area was destroyed during the rioting, and Bea Stotzer, a Department of Water and Power employee who was among a group of feminists who criticized Ueberroth earlier this month for not including more women in the rebuilding process.


The new directors also include two former pro football players: Cleveland Browns running back Jim Brown, who runs an anti-gang program in Los Angeles, and Los Angeles Rams kicker Danny Villanueva, who is now a successful entrepreneur and was boxing commissioner for the 1984 Olympics.

Since Ueberroth announced the first two sets of board members in June, his critics have complained that he left labor unrepresented and named to the panel too few women and minorities, particularly Latinos.

Jane Pisano, dean of of the School of Public Administration at USC, said Tuesday’s appointments appeared to be directed at those concerns.

“It seems that Peter has done one of the things he promised to do--which is to listen to the community and to add continued balance to the board, where community groups felt they were underrepresented,” Pisano said. “He has again broadened the board in terms of interest groups and has kept a good racial balance.”

The board now has 15 women members, eight Asian-Americans, 16 blacks, 16 Latinos and 27 Anglos.

Although Pisano has generally praised Ueberroth’s efforts, she said Rebuild L.A. needs to clarify its goals. Last month, the organization released a sweeping mission statement pledging “to achieve change by creating new jobs, economic opportunities and pride” in economically neglected areas.


Joel Kotkin, an international fellow at Pepperdine University’s business school, said some of the new appointments--particularly Latino businessman Villanueva--”are a step in the right direction.”

But Kotkin said the board is much too large to be functional. “This is Noah’s Ark,” he declared.

He also expressed concern that Rebuild L.A. has become, in effect, “a shadow government” in Los Angeles--that too many people are coming to believe that they don’t have to act because Ueberroth will solve all the city problems.

Other critics, such as Eric Mann, director of the Labor Community Strategy Center, question what they perceive to be Rebuild L.A.’s developing strategy. “If Ueberroth is going to really succeed, he has to hold the companies to hard bottom lines,” Mann said.

He said that the plans of General Motors and its Hughes Aircraft subsidiary--praised by Ueberroth at a press conference Monday--to contribute $18 million to the rebuilding effort over the next five years pale by comparison with the impact of closing GM’s auto plant in Van Nuys, scheduled for later this year.

“Why doesn’t Ueberroth demand that GM keep open the Van Nuys plant to build non-polluting public transit vehicles?” Mann said. “That plant, while located in the San Fernando Valley, has large numbers of refugees from the closed GM South Gate plant and employs many people of color.”


Another potentially thorny issue for Ueberroth is how much power the board will have. He has said that he expects the board members primarily to work on task forces, rather than pass judgment on staff work or approve deals that might bring new enterprises to depressed areas.

Some board members, such as Esther Valadez, a partner in Affordable Housing Associates, made it clear Tuesday that they think a more potent role would be appropriate.

She said after the meeting that she thought Kinsey and Ueberroth were made aware “that the directors want more information” during a part of the meeting which was closed to the press. “We’re representatives of the community, and we’re asked all the time what Rebuild L.A. is doing,” Valadez said. “We need a better link with the staff and the decision-makers. The officers need to provide us with information, so we can decide if the context in which they’re making decisions is correct.”

Still, she and several other board members all said the meeting had been a useful beginning. “I was glad that we finally met after months of waiting and getting organized,” said Korean-American attorney T.S. Chung.

“It was important for setting a tone of optimism and positive energy,” said Leo Estrada, associate professor at the UCLA Graduate School of Architecture and Urban Planning.

Estrada and Valadez said that several people told consultant Taylor during the closed session that they felt his presentation had focused too much on the disparities between South Los Angeles and the rest of Los Angeles County while not paying sufficient attention to other neglected areas, such as Pacoima, East Los Angeles and Koreatown.


Their remarks reflected the intense concern of various interest groups that resources coming to the city in the future be equitably allocated to all of Los Angeles’ neglected areas, not just those where there was rioting.

One board member--state Treasurer Kathleen Brown--came to the meeting with a specific agenda. She urged that board members lobby individually on behalf of pending federal legislation which creates incentives for capital investment within federally designated enterprise zones.

Brown also urged her colleagues to facilitate affordable housing in Los Angeles’ neglected areas by encouraging corporate investment in federal and state tax credits.

The board took only one formal action at its closed meeting--unanimously adopting an internal ethics code. Details were not disclosed.

UEBERROTH SHARES BLAME: Ueberroth called his own business part of urban problems. A3

New Members

Here are the newly announced members of the board of directors of Rebuild L.A. C. Michael Armstrong, Hughes Aircraft Co. Helen Bernstein, United Teachers-Los Angeles Jim Brown, Amer-I-Can Judy Chu, Monterey Park councilwoman Maria Contreras-Sweet, 7-Up/RC Bottling Co. of Southern California R. Thomas Decker, Bank of America Yang Il Kim, National Korean-American Grocers Assn. Bernard Kinsey, Rebuild L.A. Bruce N. Ramer, Gang, Tyre, Ramer & Brown Tony M. Salazar, McCormack Baron Barry Sanders, Latham & Watkins William Sauerwald, Painters District Council No. 36 Jane Small, Los Angeles County Commission on Disabilities Elizabeth Martinez Smith, Los Angeles Public Library Bea Olvera Stotzer, L.A. Department of Water & Power Casimiro Tolentino, Asian Pacific American Legal Center of Southern California Akir Tsukada, Japanese Business Assn. Daniel Villanueva Sr., Villanueva Capital