New Jobs Beat Spent Memories

“Job creation” is a sweet phrase for economists and politicians, and City Councilman Richard Alarcon used it Monday to talk about the Voit Cos. and Selleck Properties deal to buy 68 acres of the old General Motors assembly plant in Panorama City.

Three and a half years after GM’s last car rolled off the assembly line, the Voit Cos., which developed office buildings in Warner Center, and Selleck Properties, which specialize in shopping centers, say they will turn this land into a $75-million to $100-million development. It will feature a mix of mid-size manufacturers, retail and department stores, a theater complex and restaurants, with the first tenants opening by spring 1997.

Developer Daniel Selleck talks of 2,000 jobs taking root in three to five years, and Alarcon says many of those jobs will be filled within a five-mile radius.

But Monday’s announcement adds up to a “glass-is-half-full situation,” said Jack Kyser, chief economist with the Economic Development Corp. of Los Angeles. “It was a derelict property. At least something is being done with it and the land will be put back into use.”

Kyser thinks back to the GM days--the plant still had 2,600 employees when it closed--and workers making $16 an hour plus first-rate benefits, and a $100 million annual payroll. “If you look at it in terms of a direct job trade-off, we come out a loser. . . . It’s the rough world of the mid-1990s.”

Why? New stores and businesses that settle on the Selleck-Voit development will pay only a portion of GM’s former wages with fewer benefits, Kyser says, so the trickle-down impact on the Valley economy won’t match the GM days.

This a common problem for Southern California: How to replace high-paying manufacturing jobs that go elsewhere? Kyser’s answer: With great effort and only partial success.

Yet Daniel Selleck, actor Tom Selleck’s brother, is obviously upbeat and talked about how his family grew up in Van Nuys. “We used to cruise Van Nuys Boulevard as teenagers.”

Selleck is betting on this local knowledge, some fast-track assistance from the mayor’s office on permits, and a new satellite police station to go up next door to “help convince tenants this can be a viable project,” Selleck said.

How well this project turns out in the long run “depends on the spillover multiple,” said Gary Schlossberg, Wells Fargo economist. He means how much money is poured into the local economy by people who get these new jobs, and any extra business created for local suppliers and support firms.

By Kyser’s reckoning, every job at a big manufacturing plant like GM’s Panorama City assembly plant created 2.6 jobs elsewhere in the economy. In retailing, the multiplier is 1.6 jobs, and part-time movie-theater jobs don’t produce any extra jobs, he says.

Selleck and Voit have grand designs, but they won’t actually take ownership of the land till summer, and they need to line up tenants before they can secure big construction loans. Once construction begins, Alarcon says, there will be 2,000 construction jobs.

Although there is a risk with any real estate project, the Selleck-Voit team has one big edge in this deal. GM said Monday that its former Panorama City site has been cleaned of toxic wastes and has passed a federal review. Compare that with the experience of Jona Goldrich, a real estate developer for 40 years who helped build Marina del Rey and learned the headaches of taking over a closed auto plant when he bought the GM plant at South Gate in 1988.

Goldrich says he paid $12 million for the South Gate land, plus $40 million to put up buildings. Today, he has four tenants, including clothing companies and a document storage firm, with about 650 jobs. When GM closed its South Gate plant in 1982, 2,550 workers lost their jobs.

“We bought at the wrong time,” Goldrich said. The recession hurt, and the ’92 riots scared away possible tenants, he says.

Another big problem was cleaning up the toxic mess. GM spent $12 million, and “it’s not completely cleaned yet,” Goldrich said. “It took a lot longer than we expected.”

So Goldrich passed on bidding for the GM Panorama City site. “I was scared by the toxic problems. I thought it might take 10 years to clean it up.”

Rockard Delgadillo, of Mayor RichardRiordan’s office, said the South Gate and Panorama City sites have nothing in common except that GM “used to own both.” Selleck-Voit, he contends, are relying on a more innovative mix of commercial and industrial tenants.

Of course, the final scorecard on this deal will take years to tally. The one certainty is that for months the only jobs at the old plant have been those operating wrecking balls, bulldozers and dump trucks as workers sort out lumps of concrete from twisted and rusted metal.

At least the Selleck-Voit deal is a sign of hope. Right now the only thing growing at the old GM plant is weeds.