NEWS ANALYSIS : Message of O.C. Mini-Summit: Time to Act

It didn’t quite match the breadth of Bill Clinton’s gathering of business and economic leaders last month in Little Rock. But Orange County’s economic summit in Irvine galvanized the view of local developers, manufacturers and economists that the state is awash in unnecessary regulation and will suffer without drastic and immediate reform.

The strident, anti-regulatory message, delivered over five hours Friday by more than two dozen speakers, was not surprising, given the fact that many of the invitees, representing some of the county’s top companies, have voiced such views before.

But the litany of complaints served as strong notice to Assembly Speaker Willie Brown and six members of Orange County’s Assembly delegation who attended the conference, that legislative inaction could lead to economic famine and possible voter revolt.

“If you’re not going to lead us, and not going to follow us, then get out of our way,” said Marilyn Loewy, president of the Orange County regional office of the Merchants & Manufacturers Assn.

To some at the conference, however, the gathering was little more than a lengthy public gripe session, repeating oft-defined but unresolved problems to an audience already acquainted with the myriad difficulties of operating a business in California.

“How many forums and conferences do you have to have to know that something is drastically wrong?” asked Tim Cooley, director of a coalition of business, government and economic leaders called Partnership 2010 that is working to come up with solutions. “We know what the problems are, for God’s sake. Now it’s time to solve them.”

Study upon study, most notably the findings of Peter V. Ueberroth’s Council on California Competitiveness nearly a year ago and a more recent study by Assembly Democrats, have already laid out the business concerns that were repeated Friday before 200 people at the Fluor Corp. headquarters.

Business leaders want to ease the maze of restrictions that have been placed on construction, streamline the vast amounts of paperwork needed for new projects and amend environmental regulations that have been imposed on industry to make it more difficult for opponents to challenge business construction or expansion.

At the same time, they are looking for an overhaul in workers’ compensation laws and regulations that businesses say make it all too easy for employees to collect benefits for job-related injuries, even when the claims are suspect.

On Friday, speakers also bemoaned what they said was a “hostile” business climate that has contributed to an exodus of 73,000 jobs from Orange County in the past three years. At the same time that the job base is shrinking, workers’ compensation claims and welfare costs are rising unchecked, company leaders said.

With local banks reluctant or unable to make construction loans, and state regulatory requirements that can add as much as $80,000 to the price of a new home, builders told the Assembly gathering that invitations to relocate outside California are made more appealing.

Developers recited tales of bureaucratic excess and delay, including years-long waits for projects to be approved, or paying multiple building permit fees and special taxes for the smallest construction work.

“Regulatory overkill has blossomed like weeds and cancer,” said Karl Bergheer, president of Bergheer Pacific Inc., a Newport Beach developer. “We’ve gone from good to bad to worse, with no daylight in sight.”

Hoping to revitalize California’s sagging economy, Gov. Pete Wilson unveiled a plan last week to spark new growth by making construction projects more difficult to oppose. Predictably, Orange County’s business leaders applauded the proposal, while environmentalists and growth management proponents expressed concern.

It is still unclear whether Wilson’s controversial plan to stimulate the economy, which also includes using state funds to help local governments pay for public works projects, will make it through the Legislature.

But Orange County’s business leaders made it clear Friday that they support any plan that will ease restrictions on business, and called upon Brown, the governor’s staunch opponent in a variety of areas, as well as on local delegation members to provide the proper legislative clout.

Many of those who attended the conference acknowledged that their recommendations were hardly fresh, but noted that having Brown (D-San Francisco) in Orange County was progress in itself, even if he did make his exit before the first panelist spoke. Nobody could recall when Brown had last visited the area.

Brown is to be the host of a statewide economic summit in Los Angeles in mid-February, patterned after Clinton’s Little Rock conference in December. The Speaker said he has recommended that Wilson offer remarks to both open and close the summit, and then convene a special session on the economy so that “every single solitary recommendation that requires legislative action, can, in fact, be implemented.”

Nearly overshadowing the predictable tone of Friday’s conference was speculation over Brown’s motivation in visiting the county, particularly when the conference was arranged through the office of Assemblyman Gil Ferguson (R-Newport Beach), a frequent Brown critic over the years.

Although some characterized the Irvine and Los Angeles meetings as convenient ways for the Speaker to upstage Wilson and take credit for new economic initiatives, Brown said today’s business climate should be viewed in a nonpartisan fashion and that the conferences will be used to underscore California’s dire economy.

“I want Democrats and Republicans alike to hear the same response . . . without reference to party or flavor,” Brown said Friday. “We clearly are a nation literally, not just a state, whose economy puts a drag on the other 49 states.”

Some took Brown’s appearance in Orange County at face value and viewed it as a genuine attempt to help the state at a time when power and leadership in Sacramento has been splintered because of last year’s budget stalemate and other problems.

“I think Willie Brown coming to Orange County was very significant,” said Judy B. Rosener, a professor in the Graduate School of Management at UC Irvine. “With a limited term, maybe he’s trying to go out on a high note. Maybe he sees a power vacuum and is trying to fill it and truly help the state with its problems. He does not come here without a reason.”

Rosener, a Democrat, believes the Republican-dominated Orange County Assembly delegation also gains from joining forces with Brown now that Clinton is President.

“I think there’s finally a feeling that we have to work together if something is to be done,” she said. “Brown’s visit was symbolic, but the symbolism was significant.”

Ferguson perceived Brown’s appearance as proof that the Speaker, now in his last Assembly term, wants to leave office with a lasting contribution to the state.

“I have seen a change in his attitude,” Ferguson said. “He wants to leave and have people say he did a fabulous job. And he is so powerful that he could solve the problem of workers’ compensation or auto insurance all by himself. I never realized that one legislator could be so powerful.”

Orange County’s “mini-summit,” sponsored by Ferguson, Mickey Conroy (R-Santa Ana) and Tom Umberg (D-Garden Grove), is one of several planned throughout the state and is to be used as grist for the larger conference next month.

Cooley’s Partnership 2010 group, which includes a 32-member board of directors from a number of fields, is planning a June 4 countywide economic forum that he says will seek to establish how government, academia and business can ensure economic development.

While sponsors of the conference promised to come back a year from now to measure what has been accomplished, business leaders say voters may grow impatient with government’s efforts and impose their own measures through the initiative process.

“A lot of people will think there’s no other choice,” said Tom Wilck, chairman of the Orange County Chamber of Commerce.

Voices on the Economy

“We clearly are a nation--a nation, not just a state--whose economy puts a drag on all the rest of the other 49 states. I can assure you that the 49 states could appear to be improving, but they would not survive, in terms of improvement, without California. We’re really at the forefront, and a leader, for that purpose. That’s what this economic summit is all about.”

Willie Brown, Assembly Speaker

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“I claim that there is not a manufacturing board of directors in the state of California that is not now, in their board meetings, discussing the possibility and prospect of their moving out of the state.”

James Doti, president, Chapman University

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“There is a growing realization in both houses, in both parties, that these problems must be solved in a very short time. We are starting to come to that realization, and the next step is for us to move very quickly.”

Assemblyman Tom Umberg (D-Garden Grove)

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“That’s how the Orange County business community feels about the government of the state of California: The time is up. Now we want to see some action.”

Richard Reisman, publisher, Orange County Business Journal

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“Over the last three years here in Orange County, our industry has gone from good to bad to worse. There is no--and I emphasize no--daylight in sight. A sign in candidate Clinton’s headquarters read, ‘It’s the economy, stupid.’ That’s undeniably true. But there’s a great deal more to be said for regulatory overkill that has blossomed like weeds or cancer to stifle the ability of our industry to produce affordable housing for anyone except the very wealthy.”

Karl Bergheer, president, Bergheer Pacific Inc.

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“The Ueberroth Commission would require that all pupils be capable of reading and writing English by the end of the third grade. Some may say that such a recommendation is not sensitive to the different cultures and languages. But if you want everybody to be equal, if you want everybody to be a taxpayer, then you need to ensure” their literacy.”

Aaron Lovejoy, president, Ultratech Resources Inc., and president, Orange County Black Chamber of Commerce

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“The California Environmental Quality Act was originally meant for public input on public projects. It was the mother of the environmental impact report. . . . It was applied to the private sector in 1972, and it has since provided tools for NIMBYs (not in my back yard). There’s a new one I heard yesterday called BANANAs--build nothing anywhere near anyone.”

Don Moe, president, Orange County Building Industry Assn., and senior vice president, Santa Margarita Co.

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“It costs me $113,000 a month for the privilege of staying in California. Should I stay? No, it’s a bad business decision. Do I want to stay here? I’m a third-generation Californian, and I like California. I’d like to stay.”

Larry Velie, president, Velie Circuits Inc.

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“As the law is set up, manufacturing companies do not pay taxes directly to the city, but retailers do, in the form of sales tax revenue.)

“Hence the fact that every city encourages shopping malls and discourages manufacturing. When you look around, you see a declining manufacturing base, and you see wonderful shopping malls, beautiful shopping malls, empty shopping malls.”

Brad Sherman, chairman, State Board of Equalization

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“That’s all that business wants--that government gets its foot off the oxygen hose of the free enterprise system, and let the system work.”

Paul Mitchell, assistant to chairman, Carl Karcher Enterprises

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“It’s not the large companies that are going to get us out of our current difficulties; they are in a world of problems all their own. It’s the small companies.”

Marilyn Loewy, president, World Trade Center Assn. of Orange County

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“We need your support in creating capital for small and minority businesses. Most of these small businesses, many of our members, exist because those individuals had difficulty finding jobs in the regular market and they’ve had no other alternative but to start a small business.”

Barbara Brown, president, Hispanic Chamber of Commerce