Valley Interview : Delgadillo Leads the City’s Effort to Treat Business Like a Client

In the past three months, the San Fernando Valley lost a major employer when Packard Bell was wooed to Sacramento but retained the Anheuser-Busch Co., which decided to stay in the Valley and launch a $175-million expansion program at its Van Nuys brewery.

In both cases, representatives from the city of Los Angeles met with the business owners, offering to help cut through the city’s red tape if they agreed to stay put. Mayor Richard Riordan has promised to do more than previous mayors to retain and attract more businesses to the city. To that end, he persuaded the City Council in September to spend $1.9 million to establish a business-retention team and hire at least a dozen people to staff it.

Overseeing the effort is Assistant Deputy Mayor Rocky Delgadillo.

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Question: What is the mayor doing to keep businesses in the city?

Answer: Our efforts are, first, to get out and talk to those people that are creating jobs, that are expanding, that are actually growing. Packard Bell happened to be one of those companies, and Anheuser-Busch happens to be one of those companies. In fact, Anheuser-Busch is going to modernize their plant. They are actually not going to add a big number of new jobs. Because they were downsizing, that allows them to hire more people in other areas and increase productivity.

What we did was help them through the permitting process, and that was basically our influence on them. Also, we let them know that the mayor was a friend and was happy to help create jobs in the city of Los Angeles. We also worked with them in connection with the Department of Water and Power. They have a water and power issue. They use a lot of it. DWP came forward with something that was attractive to Anheuser-Busch to keep them in the city. They were the second-largest power user in the city, I think.

Q: Had Anheuser-Busch looked elsewhere?

A: They had looked elsewhere in the Southland. They had looked elsewhere out of the state. They had talked about going to Arizona to build a plant on the border and basically shipping in their product here, because this is one of their largest markets.

But we convinced them to do a couple of things. One was not to move. Second, they were considering a co-generation plant to create their own power, which would mean the DWP would have lost one of their biggest clients. We convinced them not to do that.

Q: Can’t the city offer tax breaks to keep business in the city?

A: Sure, we can offer tax breaks in certain areas of the city. There are certain zones where you get certain tax breaks from the state and the federal government. The council is currently studying a proposal to limit the gross-receipts tax in certain areas of the city.

Q: Did the city offer any tax breaks to Anheuser-Busch?

A: No. I think they are in a revitalization zone that was established after the civil disturbances of 1992 so they got some state tax benefits for rebuilding and modernizing their plant.

Q: But didn’t they already know about that and take advantage of it?

A: Actually, they didn’t know about that until we mentioned it to them. Typically big companies don’t think about those kinds of things. A lot of companies don’t think about government programs. They just don’t think about government, frankly.

Q: What about Packard Bell? Why didn’t the city do more to keep it here?

A: I think we made an admirable effort to keep them in the city of Los Angeles. There were a whole lot of things that happened, one of which was very big: the earthquake. The quake happened in the middle of our discussions with them. The roofs on three of their buildings in Chatsworth caved in. So they had to move.

During all this time we continued our discussions about keeping them in the city. Of course, Chatsworth was no longer an option because the buildings were destroyed. We talked to them about the General Motors plant in Van Nuys, and we had very serious discussion about that plant. What we offered them we probably would not offer to many others, so I wouldn’t be inclined to tell you what it was but it was very, very significant benefits for staying in the city.

Q: If it hadn’t been for the earthquake, do you think you could have kept them in Los Angeles?

A: Yeah. I think it was sort of a timing issue. I think if you evaluate what we offered compared to what they got from Sacramento, what we offered was much more significant. I think part of it was also the labor costs associated with living in the city of Los Angeles.

Q: What will the business retention team do?

A: The team is going to go out to those businesses in the city of Los Angeles that are growing. Remember, we have about 300,000 businesses in the region and 12 people are not going to get to all 300,000 businesses. So we are going to use a database to pick out the businesses that are growing and help them grow even faster. We want all these companies to be the stars of the future, the “Fortune 1000s” of the future. People will go out and talk to businesses and say, “How can we help?” They may say, “Well, you can help by getting out of my way.” And we’ll say, “OK. Here is my card. Call me if you need me.”

They may say, “I’m doing an expansion, and I need to hire another 100 people, and I need another 50,000 square feet, but I’m concerned about the permitting process in the city.” We’ll say, “Let me help you get through that process.” That is one of the biggest things we can offer.

Q: What do you think are the biggest hurdles that you have to overcome to keep businesses in Los Angeles?

A: As far as I can tell, it’s the perception about the city of Los Angeles generally, and that includes the perception about the quality of life here. I think we are impacting that issue. We are going to do a new Los Angeles marketing partnership which will try to change the perception of the city of Los Angeles.

It’s a marketing campaign. You can compare it to the “I Love New York” campaign of a few years back. We will be telling the stories of some of these successful companies that are here that people don’t know about. We will talk about the fact that the economy is growing in a variety of industries.

Q: Businesses are always concerned about excessive regulations. Is there anything that the city can do about cutting the regulations?

A: Yeah. We have the Development Reform Committee, which is being headed up by Dan Garcia, and a report from them is imminent. They are probably going to make a number of recommendations on how to expedite the permitting process. Implementation of that will occur over a long period of time.

Q: What about the small Mom-and-Pop business? How do they fit into this?

A: When I talk about fast-growing companies, I’m not talking about 1,000 jobs. I’m talking basically about businesses with 20 to 100 jobs. Those are the fastest-growing companies. There are a whole slew of them. We are going to focus on some small-sized companies because some of those have really great growth potential.

When I think of Mom-and-Pop businesses, I think of the corner sandwich shop or corner Laundromat. With economic development, if you create those wealth-creating jobs, they tend to have a multiplier effect. For example, the Hughes missile site out in the Valley is vacant because they moved to Tucson. We are helping to move Coast Savings to that site. There is a sandwich shop on the corner that has suffered since Hughes moved out. They are ecstatic about the fact that Coast is going to move in and bring 1,000 people to buy more sandwiches. So that is the kind of ripple effect that will assist the small Mom-and-Pop businesses.

Q: What do you promote as the benefits of staying in Los Angeles?

A: You have some of the most intelligent, innovative people in the world in Los Angeles. You have access to some of the largest and fastest-growing markets in the world. You also have access to the whole Pacific Rim from Los Angeles.

The infrastructure here is good and getting better. We have some of the greatest universities that are willing to participate in this whole recovery process. Most of the banking industries are here. You have investment bankers. You have the lawyers. You have all the people that facilitate the growth of an economy here.