VICA Forum Issues Confident Forecast for ’95

Despite the financial and psychological toll of the Northridge earthquake, San Fernando Valley business leaders Friday forecast a robust Valley economy next year, citing the area’s resilience and efforts by government to become more business-friendly.

The optimistic assessment came from business owners and elected officials meeting at an annual economic forecasting conference sponsored by the Valley Industry and Commerce Assn., a prominent group with more than 400 members.

“They are really upbeat about 1995,” said Ben Reznik, a Sherman Oaks attorney and past chairman of VICA, who contrasted the rosy outlook with the group’s gloomy economic assessment a year ago.

“Last year was a real downer,” Reznik said.

In forecasting an upturn in the Valley economy next year, bankers cited increased deposits from clients, real estate experts pointed to a stable property market and entertainment firms predicted new jobs from the expected addition of new television networks and movie-making studios.

To buttress their assessment, several business leaders also pointed to a rousing Christmas shopping turnout last weekend in which Californians spent nearly 10% more than they did a year ago. And Southern Californians outspent their counterparts in the northern part of the state.

“In my opinion, the worst is over,” said Carla Gazzolo, senior vice president of Los Angeles-based CB Commercial Real Estate Group, who cited the “resiliency of the Valley” as a factor supporting an upturn in the local economy.

Los Angeles Mayor Richard Riordan--the conference’s keynote speaker--joined in the sunny forecast.

“The Valley has bounced back with pride and confidence,” he said, adding that he will try to cut bureaucratic red tape for businesses and strive to make city department heads more accountable for financial mistakes.

Beyond the confidence in psychological factors, the basis for projecting an upturn was more difficult to discern. Some executives suggested that federal emergency dollars and insurance settlements to repair quake damage will help kick-start a spending cycle that will rejuvenate the local economy.

However, a recent economic analysis estimated that the quake caused $357 million worth of damage to businesses in Los Angeles and that federal and local aid--not counting insurance awards--will provide only about $50 million for repairs.

Others disagreed with the theory that quake-repair money will be a significant economic stimulant, saying recovery dollars will probably provide only enough of an infusion to counter the negative impacts of the quake.

“I’ve been here 20 years and I’ve seen other earthquakes,” said Walt Mosher, VICA chairman and co-owner of Pacoima-based Precision Dynamics. “My personal opinion is that it will have a net zero effect.”

But Mosher said he is optimistic that last month’s elections brought new leaders to state and federal government who will be more sympathetic to the concerns of business owners, such as workers’ compensation reform.

“There is a lot of emphasis, since the elections, to get down to work,” he said.

John Marquis, executive vice president of TransWorld Bank, the Valley’s oldest and largest independent bank, said deposits are up 20% this year and the bank’s net income has jumped 86%.

Observing that small businesses in the transportation, construction, export, defense, computers and other high-tech industries are growing, and predicting that unemployment will drop further next year, Marquis declared: “Now is the time to look at investing in Southern California.”

But not all the assessments were positive.

A representative of Kaufman & Broad Home Corp., California’s largest home builder, predicted higher home prices, in part due to new seismic-safety regulations that are likely to be imposed on builders.

“My prediction is a tough year in 1995,” said Mark Beisswanger, president of Kaufman & Broad’s regional division. “I expect higher prices.”

Others said the high cost of health care and burdensome government regulations threaten to stifle the improved economy.

Toward the end of the conference, VICA heaped praise and took shots at government officials as the association announced its choice for the three best and three worst government decisions this year.

“If Mr. Blackwell can choose the best- and worst-dressed people of America, then we’ve decided to have a little fun,” said David Fleming, a VICA member and city fire commissioner.

VICA praised the federal government for supporting the North American Free Trade Agreement (NAFTA) and the General Agreement on Tariffs and Trade (GATT), both of which would boost the local economy, Fleming said. But the association blasted the Environmental Protection Agency for proposing local air-quality regulations that Fleming said could cost the region $200 million.

State lawmakers were honored for taking steps to reform the state’s much-maligned workers’ compensation system but jeered for failing to solve all its problems.

“The bleeding has lessened but the patient is still critical,” Fleming said.

Finally, VICA credited Los Angeles city officials for working quickly and effectively in helping quake victims recover from the disaster without imposing too much bureaucratic red tape.

But it blasted the city’s workers’ compensation system as well, which is backlogged with nearly 40,000 claims, the equivalent of one for every city employee. The association supports Riordan’s call to assign an outside regulator to oversee the system, which administers work-related injury claims from city employees.