Mayor Pushes New Plan to Boost Economy

In what was billed as his first major speech on the Los Angeles economy, Mayor Richard Riordan on Friday predicted that the city would soon emerge from its worst recession since the Great Depression and pledged to consolidate the city’s economic development efforts to smooth the way for a recovery.

Riordan’s 20-minute address to a gathering of about 300 business leaders outside City Hall promised an improved business atmosphere and reduced regulation at City Hall, but offered no tax reductions or other hard economic incentives for business.

Most of the programs Riordan discussed have been rolled out in the first 15 months of his Administration, although he did announce formation of a centralized office to submit government loan applications, the One Stop Capital Shop, and the commencement of a series of business round-table discussions to allow industries to vent their frustrations with government.

The early morning address, delivered from the same steps where Riordan was inaugurated, was generally well received by the invited guests, although it remains unclear how the City Council will react to one central proposal: a plan for a consolidated economic development office.

Riordan and the City Council agreed this year that a system that diffuses economic development among at least four departments does not work and that a single location for business promotion would work better.

But Riordan’s earlier consolidation proposal was rejected by the council, which said it de-emphasized low-income housing construction by eliminating an independent housing department. The council also said that Riordan’s office had not determined how it would provide retirement benefits for employees of the new office.

The mayor declined to provide details of his new consolidation effort, but said he believes it will be better received, in part, because it will maintain a separate city housing department. Advocates of affordable housing had said elimination of the department, just a few years after its formation, would reduce the city’s focus on the issue.

Riordan said he plans to make the housing department even larger by adding some housing programs that had been under the Community Redevelopment Agency. “I’ve challenged our housing department to double the annual production of affordable housing over the next three years,” Riordan said.

Riordan’s plans may create a power struggle with the City Council. Some members, led by Councilman Mark Ridley-Thomas, remain intent on taking over control of the CRA.

The agency has been a potent political and economic tool, allowing the city to pour tax dollars into distressed communities. Riordan’s proposal would leave redevelopment in his hands, through his own commission.

Hearings on the matter are scheduled to begin this month. Riordan said he will veto any council attempt to take over the CRA.

Regardless of who wins the power struggle, the mayor has succeeded this week in having the council approve a 19-person office, under his control, that will help him respond to specific dilemmas posed by the business community.

Although the office will help speed city permits to companies and connect them with government loans, it will not be able to offer tax cuts or other hard financial incentives, Riordan said.

“We have a business gross receipts tax, which a lot of other cities and other states don’t have,” he said in an interview after the speech. “We have a lot of fees that are really way too high. . . (But) we need the revenue in the short run to make the city safe.”

Riordan was looking tanned and fit after a weekend getaway in Squaw Valley. He left at midday Friday for a 17-day European cycling vacation.

The assembled business leaders greeted Riordan with sparse applause and many said they were more pleased with the tone than won over by any single proposal.

Jack Kyser, chief economist of the Economic Development Corp. of Los Angeles County, praised Riordan’s upbeat attitude and said the consolidation of economic development programs is “extremely important.”

“You’ve got a roster of all these economic development agencies (within the city) and what you’re looking at is a touch of schizophrenia,” Kyser said. “By combining them, people will have a single source to go to, and you’re going to be much more effective.”

Economist Joel Kotkin, a senior fellow with the Center for the New West public policy think tank, said he believed that Riordan was subtly attempting to lean on the City Council to get his economic development initiatives approved.

“Dick Riordan was elected with a very strong mandate to do certain things, but the council was not elected on the same ticket,” Kotkin said. “What he’s got to do is develop very strong support in the business community and the community in general to push through some of these reforms.”

John W. Mack, executive director of the Los Angeles Urban League, said he was most pleased that Riordan had moved beyond “his laser beam single focus on adding more police to the LAPD.” Mack called on Riordan next to “become more aggressive and focus on job creation and African American business opportunities south of the Santa Monica Freeway.”