A Big Boost for Los Angeles

There is an unusual but welcome harmony in City Hall. Mayor Richard Riordan and a unanimous Los Angeles City Council are working together on something. Lovely.

Their agreed-on goal: to establish a federally funded community development bank to funnel millions in new capital into businesses, creating thousands of jobs in poor neighborhoods. Washington also appears to be on board; President Clinton is a longtime supporter of community development banks. However, the federal checks can’t go out until the U.S. Department of Housing and Urban Development signs off.

To its credit, HUD is working closely with the city on the application for $200 million in loan guarantee funds. The cooperation is expected to help Los Angeles seal the deal and avoid a new embarrassment: Last year it failed to win a federal empowerment-zone designation, which would have been worth more money than the proposed bank. It was in fact as consolation that the Administration granted $100 million to help start the bank.

Riordan boosted the city’s case by putting together a public-private partnership. Bank of America has committed $50 million, and other large financial institutions are being wooed. The mayor also will try to attract the state’s large public pension funds, a logical source for new investments; the pension funds and other wary investors should be reassured by the fact that federal backing reduces risk. Rebuild Los Angeles, too, is a logical choice to have a leading role in seeking new money.

If HUD approves, as expected, the millions will start arriving soon. Thus mayor and council have to get cracking over whom to appoint to run the operation; the board and staff should be in place and be ready to do business in riot zones and the other poor neighborhoods of Los Angeles. The need is urgent.