L.A. Refocuses on Basics: Rebuilding the Inner City : Economy: In the year since the riots, successes have been mixed with frustrations in revitalization effort.

Now that the verdicts in the Rodney G. King civil rights trial are history, attention once again has turned to a fundamental problem underlying last year’s urban unrest--the persistent economic privation of the inner city.

“It refocuses the city’s attention--and the rest of the nation’s attention--on the real job, of reinvesting in the inner city and generating investment opportunities for people,” said Barry A. Sanders, co-chairman of Rebuild L.A.

It has been nearly a year since riots rocked Los Angeles and the nation, setting in motion what is perhaps the most ambitious--and daunting--experiment ever conducted in urban economic revival.

How is it working?

Urban planners and academic experts say the efforts since the riots constitute the biggest mobilization ever made of capital in an inner-city area. Thousands of jobs have been created and hundreds of millions of dollars in private money has been committed to the inner city, according to Rebuild L.A., the nonprofit organization formed last May to spearhead revitalization.

Job-training programs have been created, new stores have opened, small businesses and community entrepreneurs have emerged and bank branches have been added. From the communities have come new deposits in community banks, strengthened local agencies and a renewed sense of purpose.

There is hope that in the coming years and decades, efforts will begin to show even more substantial results--in creating quality jobs and new prosperity. “This is a long-term effort, and long-term efforts don’t show their products short-term,” said Sanders, noting that the revitalization efforts aim to reverse 40 years of neglect.

At the same time, however, community leaders, corporate executives and academics agree that progress has been frustratingly slow and that there has been little noticeable change in inner-city areas. Recovery efforts have been hampered by continuing job losses and recession in the state. Federal assistance has been stalled along with President Clinton’s larger economic stimulus package.

“We don’t see new start-up businesses, nor the ones there expanding,” said U.S. Rep. Maxine Waters (D-Los Angeles) whose district encompasses many of the riot-affected communities. “There’s a need for new capital, investment and joint ventures. I don’t see that in any appreciable amount, and the commitments we’ve seen . . . could be better coordinated.”

Moreover, progress has been difficult to gauge because there is no reliable standard by which to measure it. Inner-city America boasts few economic success stories and certainly nothing on the scale of the revival being attempted in Los Angeles.

At the heart of Rebuild L.A. leader Peter Ueberroth’s strategy for economic recovery is a triumvirate in which government, private corporations and the community shoulder the burden together. As the end of their first year of work nears, here is an analysis of how each has performed:

GOVERNMENT’S ROLE

Robert D. Taylor, a principal with the management consulting firm of McKinsey & Co., told Rebuild L.A. that it would take $4 billion to $6 billion in investment and the creation of 75,000 to 94,000 jobs to bring the unemployment level in inner-city areas up to par with the rest of the county.

Public help was to come in the form of federal enterprise zones, infrastructure rebuilding programs, strict enforcement of reinvestment laws, establishment of community development banks, and crime, education and family service programs.

But major public efforts have stalled.

A federal urban aid package targeting South-Central Los Angeles and other impoverished areas expired last year after post-riot interest in Washington waned.

The state, facing another massive budget deficit, has held up passage of several post-riot economic development proposals, including a temporary statewide sales tax increase to finance rebuilding efforts, tax incentives for small businesses and a bill to create revitalization zones in the city.

Meanwhile, President Clinton’s summer jobs program, infrastructure rebuilding program, job training and other programs, aimed at benefiting Los Angeles as well as other U.S. cities, remain stalled in Congress along with the rest of Clinton’s economic stimulus package.

Compounding the challenge is the region’s persistent recession. Unemployment is higher than ever. In Los Angeles County, the unemployment rate, not adjusted for seasonal variations, was up to 10.4% in March from 9% a year earlier. Unemployment remains highest in inner-city neighborhoods.

The pace of rebuilding riot-damaged areas has been painfully slow. Estimates of business losses due to the riots top $1 billion.

In the city of Los Angeles, 1,036 sites suffered damage in the rioting, with a value of about $378 million, the city estimates. About half suffered major damage. But in the last year, only 160 permits have been issued for rebuilding or major repairs, said Nick Delli Quadri, a senior structural engineer with the city’s Department of Building and Safety.

“People are taking a wait-and-see attitude, or just don’t have the money to rebuild,” he said. “Many of them didn’t have insurance.”

THE PRIVATE SECTOR

“There were a lot of promises for significant amounts of money to be brought to bear on the problems of South-Central” and other areas, said James H. Johnson Jr., a UCLA professor of geography and director of the university’s Center for the Study of Urban Poverty. “But whether it has appeared or had any effect is a different matter.”

From private corporations was to flow capital, job training programs, new businesses, new jobs. The idea was to redress the loss of 200,000 high-paying, mainly unionized manufacturing jobs that disappeared from 1978 to 1989 in the Los Angeles economy, job losses that disproportionately affected South-Central Los Angeles and other inner-city areas, Johnson said.

Much of the money committed by private corporations has not been spent. And the funds that have found their way into programs have resulted in few new businesses, good jobs or other meaningful economic development, critics say.

Major corporate commitments include a $100-million rebuilding pledge by the Vons Cos.; a $35-million promise by Southern California Edison Co.; a $31-million program by IBM Corp.; an $11-million program of new stores by Chief Auto Parts, and $7 million by Atlantic Richfield Co.

In addition to new retail outlets, much of the money has gone to job training programs. Some of the money has gone to community agencies. Other funds have gone to local banks or funds to finance businesses.

There are tantalizing prospects of real development, but they remain frustratingly out of reach. Mercedes-Benz, which recently announced plans to build a 1,500-worker U.S. plant, won’t say whether a California or Los Angeles site is on its list. But most observers believe that would be a long shot anyway, given the state’s business climate, lack of suitable 100-acre sites and high costs.

Meanwhile, Ben & Jerry’s Homemade Inc., the Vermont-based gourmet ice cream maker, confirmed that it is considering some kind of manufacturing operation in Los Angeles. But “it is really far too early to say we have any plans whatsoever,” a spokesman said.

Still forming are a Rebuild L.A. program to create a community development fund and a second community development corporation put together by several major banks to provide capital and technical help to would-be entrepreneurs.

At the same time corporations have pledged to help, they have also been forced to respond to recessionary pressures on their businesses. After General Motors Corp. and its Hughes Aircraft Co. subsidiary announced an $18-million rebuilding plan, the company said it would move its 1,900-worker Hughes Aircraft missile plant in Canoga Park to Tucson.

At the same time, a Hughes promise to move one of its operations to the inner city amounts to the relocation of a 30-person office, with no new hires from the surrounding community.

Bank of America and Wells Fargo have boosted commercial lending to minorities in inner-city communities, but they have scant data to say who has received new business loans or where they are.

Even as new programs are announced, plants are considering relocating. Most recently, Rykoff-Sexton Inc., the giant food service distributor and manufacturer that has operated a 1,500-worker, 1.4-million-square-foot plant in Central Los Angeles since the mid-1940s, said it is considering moving out of the city, perhaps to a suburb. The reason: It may need more efficient space, company spokesman Roger S. Pondel said. No decision has been made.

Meanwhile, the experience of Electricar Los Angeles shows the uphill struggle to turn a smart business idea into reality.

The fledgling electric car company started by Solar Electric Engineering of Sebastopol converts cars and vans to electric power, for sale to public and corporate fleets. Rebuild L.A. hopes the firm will eventually employ 25 people for every 100 vehicles produced in a 14,500-square-foot plant at 190th and Figueroa streets.

But the company is still in organization. It has sold a few vehicles, but it still has no fleet contracts. And it so far employs eight workers, company spokesman James L. Driver said. Only four are from the surrounding community; the rest were brought from Northern California.

COMMUNITY INVOLVEMENT

From the community was to come reinvestment programs, entrepreneurial activity, local support of businesses and neighborhood building. Indeed, activists and many experts contend that community reinvestment is the best hope for meaningful development.

For example, the L.A. Renaissance Program, operated by First African Methodist Episcopal Church in Los Angeles, was created to provide “micro-loans” to help new businesses get started, a way to get around the nagging lack of capital in the inner city. Walt Disney Co. invested $1 million and Arco invested $500,000 in the fund.

So far, the program has made only 10 loans, totaling $162,000, to local businesses. Of those, six or seven were start-ups, creating about six new jobs, said Mark Whitlock, the program’s executive director. Still, “it’s a shot in the arm, and it has given hope to them and other businesses,” he said.

Founders National Bank is one of three black-owned Los Angeles financial institutions that have benefited from post-riot corporate largess.

Arco invested $1 million in Founders and pledged another $1 million as a matching fund challenge to other corporations to invest in Founders. In addition, Bank of America pledged $1 million in stock and debt to allow Founders to buy two B of A inner-city branches that were slated for closure.

Support from the community, meanwhile, will take Founders from $61 million in deposits to a projected $100 million by June, said Carlton Jenkins, managing director. And that has allowed the bank to make new loans to local businesses.

That translates into a dream fulfilled for Jean Wilson, 40, who is building a small shop called Big Time Sunday Donuts, Muffins and More in an Inglewood mini-mall.

Wilson, who lost his job as manager of a Kentucky Fried Chicken restaurant more than a year ago, decided to strike out on his own after failing to land another job. He was able to proceed with a loan from Founders.

If not for them, “I would have probably tried to get some equity out of my home,” he said uncertainly. Now he expects to hire up to 10 workers when he opens this month.

Similarly, Harold L. Williams has benefited from a Founders loan. Williams, 68, has been an architect in Los Angeles since 1960. Since 1970, he has tried to get a line of credit to help tide him over lean times or to bolster cash flow as he geared up for a new project.

But he was turned down repeatedly by the major banks. It wasn’t until he talked with Founders last year that he won a $51,000 line of credit to help him prepare for a new $6-million project: designing a police station.

Now, he is able to hire two new people for his staff, bringing the total to six. “It’s made things a lot easier,” he said.

Jenkins says the community needs more help from the major banks. “(We’re) still relatively small and unable to provide the kinds of financial support that will cause a black-owned hotel to take root, or a black-owned chain of drugstores, or any serious ownership of something that has genuine major league economic impact,” he said.