Los Angeles Times Interview : David Lizarraga : In the Business of Rebuilding the Eastside of Los Angeles

To a large part of Los Angeles, the economic movers and shakers on the Eastside are as unknown as the names of its major arteries of industry. But for the millions who tread and trade along Whittier Boulevard and Cesar Chavez Boulevard, David C. Lizarraga is a major entrepreneur in the redevelopment of their community.

As chief operating officer of the East Los Angeles Community Union--or TELACU--Lizarraga, 53, and his team have built industrial parks, affordable housing and mixed-use commercial complexes, opened a bank and developed social programs. With his board of directors, he weighs all investment decisions between profit and social responsibility. His political influence stretches from California’s palm-dotted boulevards to Washington.

Born in East Los Angeles, the teen-age Lizarraga made a hard U-turn from a life of crime to become a youth counselor in a United Way program. During the 1960s, he redefined public housing in Los Angeles with the Casa Maravilla Housing Community. And by the early 1970s, Lizarraga had control of TELACU. This grass-roots organization rose out of the 1965 Watts Riots and community leaders’ concern about their disenfranchised status. While greater Los Angeles was experiencing an economic revival, East Los Angeles had an unemployment rate three times higher than the rest of the city.

Last year, the 25-year-old TELACU had a portfolio worth one-third of a billion dollars. The company is the second-biggest minority-owned business in Los Angeles County, and ranks 21st among Latino-run corporations nationally.

Affable, but reserved around the press, Lizarraga has not forgotten the early 1980s, when TELACU’s reputation sagged after allegations of financial irregularities. After putting his fiscal books in order, Lizarraga embarked on a dazzling development schedule and diversified TELACU’s investment portfolio.

These days, Lizarraga has the ears of Mayor Richard Riordan, President Bill Clinton, Secretary of Housing and Urban Development Henry G. Cisneros, corporate leaders and the rapidly growing Mexican-American community. Married and the father of one son, Lizarraga had just become a grandfather for the third time when he recently sat down to talk in his corporate headquarters.

Question: Does TELACU give the Mexican-American community clout?

Answer: In a capitalistic society, those without capital are impotent and cannot make any changes unless they do it through the vote or through mass action. Disinvested communities, be it an American Indian reservation, the barrio or the ghetto, are all forms of economic reservations. Economic empowerment is as important as political empowerment . . . . So we formed the “nonprofit” organization TELACU as an umbrella for the “for-profit” holding companies that have the assets, income and employees, which give us economic clout.

And you can’t ask people to come and invest in your community if you’re not willing to do it yourself. Why should we ask people from the Westside to come to this community if we don’t have local people willing to take a risk?

Q: You have 12 subsidiaries under the TELACU umbrella. Do you have favorites?

A: We’re very proud of our real-estate division, our financial-services division, which has a bank within it, and our operating companies, which has our job-creating operation. But I’m particularly proud of this industrial park (where TELACU headquarters are) because this was a disinvested, broken-down tire site where B. F. Goodrich once employed 2,300 people. But once the automobile industry deteriorated, it was closed down.

So we were able to show our community that you can invest in East L.A. As they saw the physical changes come to this building and this industrial park, they could see people cared.

Q: So you think enterprise zones are a viable economic catalyst for community development?

A: The enterprise zone is more than just an attempt to build industrial space. It is an attempt to attract expanding businesses to where they will create employment in an area that has certain demographics.

So empowerment zones are important because they bring in investors and business who are looking for benefits that they otherwise would not have. The empowerment zones also mean not only reinvesting, but also empowering the community and making it part of the strategy and process. Enterprise zones are merely saying to the business community, we need your help. We are willing to give you some incentives, if you will come here.

Q: Did your experience developing the Casa Maravilla Housing Community prepare you for leadership within TELACU?

A: It taught me the value of community participation. The original draft plans were for the traditional high-rise structure popular in the Midwest, like Chicago and places like that, because it was more cost effective and a better use of land. But we persuaded the housing authority to allow community participation in design and construction.

Their involvement yielded a tremendous benefit in the long run. Today, 15 years later, the Maravilla Projects look like no other housing project in L.A., because it has no graffiti. What I have learned is that you can depend on the community if you ask them to participate, and that they will come up with a product that will have long-lasting use. That is the benefit of community participation.

Q: Is that why you restructured the TELACU board of directors?

A: David Lizarraga does not own the stock. The nonprofit owns the stock and they determine what happens, how the profits are spent and how they are reinvested. We felt the community needed to have control of the destiny of this organization. We have a majority of community residents on our board, but we also have members from the private sector--i.e., investors, bankers. But it is really important that those board trustee members are community residents and that they always have a majority.

Q: How do you pick the businesses to include in your industrial parks?

A: We look at the bottom line as it relates to both the social and economic benefit. In one example, we could have leased 1 million square feet of industrial space to a single warehouse, but that would have only created 50 jobs. Instead, we selected the plastics manufacturer Win-Cup, Inc., which makes spoons and forks for food franchises like McDonald’s. That way we created 600 jobs.

Q: You’ve placed a special emphasis on senior housing. Why?

A: We began with housing for seniors because the traditional family unit has broken down, and they were very needy. We now have City View Terrace under construction. It’s 600 single-family units for first-time buyers. We also have three other developments in the pipe line . . . .

We believe in home ownership and giving families their first opportunity to build equity, instead of being renters all their lives. That is why we started our Community Thrift and Loan Bank, almost 14 years ago. We wanted to fight red-lining by showing that our borrowers are good borrowers and that you could make a profit in this community.

We know that our community is not a high-risk borrower and we believe the housing niche that we are addressing--which is the moderate- and low-income buyer--is a good candidate for home purchase. Fifty percent of our bank loans are for mortgages, but we don’t lend to our own developments; we consider that a conflict of interest.

Q: How did you select your development sites in such diverse sites as Hawthorne, City of Commerce, Moreno Valley and San Antonio?

A: Our greatest impact has obviously been in East Los Angeles. But in the past, cities have come to us saying we need your help and participation and we’d like to work with you.

The Century Freeway project is an example of a very successful program created by the state to provide second mortgages to home buyers, and we participated, along with the federal government, because we believed in partnerships with the private and public sectors that benefit the community.

With the San Antonio Business Center, that was a little different story, because we needed to assist another sister organization, the Mexican American Unity Council. They are a community-development corporation like us and they were looking to develop an industrial park, and we helped them build it.

Q: It’s been said that anyone interested in a career in East L.A. must get your “king-making” seal of approval.

A: I don’t think there is anyone that I have crowned king in any shape or form. However, we are fortunate to have many Latino representatives in the state Legislature and in Congress whom we’ve supported. I don’t think anyone can make someone else a king or leader. That’s a voter decision. Now, we will roll up our sleeves and put our shoulders against the wheel and make a go of it with anyone who wants to help us. And I definitely do not look forward to participating in politics in a formal manner. I think everything we do in our community has political nuances--from the street sign to where you create your next industrial park. My goal is to help build other TELACU-type of organizations.

Q: How did you restore TELACU to good graces after the allegations of misappropriation of federal funding?

A: We went through some difficult times--but we survived. The only way you make hard times better times are by your actions. So, we moved ahead with our housing strategy and let that speak for us.

It was part of our growth curve. You don’t make the same mistakes twice. What has made us successful today is that we now know what we are not. If you really want to have an impact, you build a team. Share the dream, share the vision, share the success, because quite often you might have to share the failure.

We’re not perfect, but we’re willing to take a risk, because quite often you might have to share the failure. We’re not perfect, but we’re willing to take a risk, because the only other alternative is not to grow. Anything that doesn’t grow has to die, and you always have to strive to have more impact and that is the responsibility one has in the community-development process.

Q: How does your Youth Services Club reduce the seduction of gangs?

A: Our youngsters need options. We tutor them and get them through high school. Many of them are referred by the court system as being problematic, but we don’t think they are problems. We just think they need guidance and direction. We try to get them in college, and we’ve given our youth over a million dollars in scholarships to attend local colleges.

Q: Why is your scholarship program a matching system?

A: Prior to our involvement many local colleges weren’t making financial loans to our youth. So, we challenged them to match our dollars. Sometimes we had to shame them, but we’ve been able to leverage our dollars and that is what it’s all about.