Regional Economic Development Plan Needed to Bring L.A. Recovery

First there was the civil unrest of 1992, confined largely to the working poor, minority and immigrant neighborhoods of central Los Angeles.

Then came the Malibu, Altadena and Laguna Beach fires, with their severe impact on predominantly middle- and upper-middle-income white homeowners.

And now we’ve survived the great Northridge earthquake, which has left a number of San Fernando Valley and Westside residents homeless while tangling the travel of many commuters.

City residents, beach dwellers and suburbanites seldom interact--and they rarely agree on what role government should play in redressing contemporary urban ills. But now these three segments of our population share the realization that without significant government intervention, the road to recovery may be blocked.

Remarkably quick government action has already put Federal Emergency Management Agency checks into the hands of a number of people displaced by the earthquake. Crumpled freeways have been cleared. New construction is imminent, aided in no small measure by congressional support for $8.6 billion in emergency aid.

Unfortunately, once the freeways have been repaired, housing replaced and cracked plaster fixed, old habits are likely to resurface. Metrolink ridership will decline. Those who traveled on surface streets through previously unfamiliar neighborhoods will return to the anonymity of daily freeway commutes.

Equally ominous, many individuals who were aided by government assistance once again will think unkindly of those who--though not directly affected by the latest disaster--nevertheless suffer mightily due to insufficient government action.

Before that happens, is there any possibility of creating new coalitions, based on the quake-inspired recognition that our shared fates could spur problem solving that is both future-oriented and of benefit to us all?

For example, what if Los Angeles Mayor Richard Riordan--in concert with several other mayors in the region--were to convene a group of business owners small and large, representatives from financial and insurance institutions and various community-based leaders and challenge them to create a regional economic development plan that would have the following objectives:

* Increasing the number of jobs in the core area of each of their cities.

* Developing incentives designed to assure that a large percentage of any new jobs created would go to city residents.

* Engaging in a cooperative marketing strategy designed to enhance the competitiveness of the Los Angeles area.

Why these objectives?

The need to stimulate the economy through local job growth is obvious, and the earthquake has served to underscore the spatial mismatch between suburban housing and urban jobs. We either devise ways to reduce this disparity or suffer the consequences when the next disaster immobilizes our freeway system.

Efforts at job creation must give highest priority to bringing the unemployed and underemployed into the work force. This would particularly benefit impoverished residents. Obvious side benefits of this strategy include crime reduction and fewer families on welfare.

Cooperative marketing is needed because the events of the last two years have generated tremendous fear among would-be tourists and investors. Couple these fears with the persistent sluggishness of our economy, and extraordinary measures must be taken.

With its own economic development plan, Los Angeles would be uniquely positioned to forge a partnership with the federal government that could tailor emerging programs to our region’s needs.

*

The “empowerment zones” being created by the Clinton Administration are a good example.

These zones are the federal version of California’s 13 enterprise zones. Empowerment zones will offer tax benefits to companies that locate within them, along with substantial investment of federal resources and enhanced coordination among federal agencies.

But the federal plan does not alleviate problems evident in California’s enterprise zones. These zones have not stimulated significant job creation. Only the zones in Pacoima and San Jose have created more jobs than would have been expected otherwise. The Watts zone has shown a net loss in jobs.

A primary reason for these disappointing results is that the incentives offered to employers for locating in such zones are not sufficient, compared to the competitive advantages of locations elsewhere. By the same token, many of the employers who have located in the zones were unaware of the program and never took advantage of the incentives.

The impact of the federal program would be even more limited because of its narrow scope. Under current plans, Los Angeles will receive only one empowerment zone, and it will be limited to a 20-square-mile area with a population of no more than 200,000 and a high concentration of poverty.

How can we fix things? If linkages could be forged between firms beyond the zone and employers and residents within it, much more in the way of benefits could be produced.

For example, the positive impact would multiply if the incentives were extended to companies outside the zone that subcontracted with firms inside it. The objective, after all, is to strengthen economic viability within the empowerment zone. Consequently, any employer that participates should enjoy the benefits of contributing to the objective. That change alone would link the relatively small empowerment zone to opportunities in the larger, regional economy.

The key to making this work would be a truly regional economic development strategy, one that parallels the Southland’s $183-billion investment in rail transit, the efforts to restructure the sprawling aerospace industry and the campaign to develop an alternative transportation industry in Southern California.