Washington Comes Through, Finally

The Clinton Administration is making good, finally, on promises made by Washington when the fires of the 1992 riots still burned. The new Community Development Bank, approved last week by the Los Angeles City Council, will funnel needed capital into impoverished areas via grants and loans to businesses. The $450 million is welcome and long overdue.

The Community Development Bank will pump new money into job-starved neighborhoods where capital is often hard to come by. The investments can be directed to businesses in any poor community, and the riot zones will have priority.

Much of the credit for this bold endeavor belongs to the U.S. Department of Housing and Urban Development. Federal housing officials took the lead, providing the $450 million in grants and loan guarantees. They also gave invaluable assistance to city officials so Los Angeles wouldn’t blow another opportunity after last year’s embarrassing loss of a coveted federal empowerment zone.

Private financial institutions sweetened the deal by adding $210 million in loan commitments. This admirable public-private marriage is expected to generate $1 billion in new investment over the next 10 years. Thousands of business owners and potential entrepreneurs should get the capital they need to rebuild, modernize, expand or set up shop in poor areas.

Partisan politics derailed those first promises of federal aid, made when George Bush was in the White House. He vetoed the urban aid bill, the good along with the bad, after Congress stuffed it with political pork. After Bill Clinton’s election, Los Angeles again expected to get an empowerment zone. City Hall flubbed that deal but managed to win a hefty consolation prize, the Community Development Bank.

Local politics threatened to derail the bank, however, when concerns about the makeup of the governing board developed. Fortunately a compromise was reached. The bank’s board will be appointed by Mayor Richard Riordan with confirmation by the City Council, the county Board of Supervisors, three college presidents and several legal and business experts chosen by the mayor.

Because Washington took so long to act, scars remain more than three years after the fires were put out. Shuttered storefronts and gas stations pockmark the blocks where businesses once thrived. Now help is on the way.

The Los Angeles Community Development Bank has the potential to create thousands of jobs--if politics do not get in the way. If the board is appointed quickly, new business deals to revitalize the neediest areas of Los Angeles could be under way before summer’s end. Good news, indeed.