City Economy ‘on a Roll,’ Riordan Says

Richard Riordan, the lawyer and venture capitalist elected as Los Angeles’ mayor four years ago, Tuesday pronounced the city’s economy healthy and growing but called for tax breaks and educational improvements in order to help lift Los Angeles’ poorest residents.

But Riordan had barely finished talking when his opponent in the mayor’s race, state Sen. Tom Hayden (D-Los Angeles), responded with a news conference of his own. Addressing reporters in the San Fernando Valley, Hayden unveiled his alternative economic plan, and accused Riordan of misstating the extent and significance of the city’s economic growth.

On the day of dueling economic messages, the mayor went first, delivering his speech to Town Hall Los Angeles, an organization of business leaders. Riordan emphasized progress over the last four years, but insisted that this is no time for complacency.

“Los Angeles is on a roll,” Riordan said. “But sadly, not for everyone.”

Billed as a major economic speech, Riordan’s address contained several new proposals and was greeted warmly by an audience undeterred by the mayor’s habit of stepping on his speeches’ best lines. Among other things, Riordan, whose address was titled, “Los Angeles, the Capital City of the Future,” repeatedly muffed that refrain, occasionally referring instead to the “capital city of the world.”

Nevertheless, Riordan used the occasion to call on fellow business leaders to improve job training for young people, to highlight the “Hollywood Renaissance,” to announce plans for creating a “tax-free zone” in poor communities and to reiterate the central theme of his reelection campaign, the need for strong law enforcement.

“It all comes back to safety,” Riordan said. “Safety instills confidence, clears the path for opportunity and gives us the freedom to pursue our ideas.”

After his speech, Riordan elaborated on some of his proposals, saying, for instance, that his tax-free zones would be areas in which new businesses would be lured by the promise of a five-year break on all business license fees. Companies already at work in those areas would receive a five-year freeze on fees in return for agreeing to stay.

Riordan said he would soon send that proposal to the City Council, where some members have already indicated tentative support for the notion. In addition, Riordan, who has often benefited from the Clinton administration’s grants to the city in a number of areas, pledged to lobby the federal government for its support of the tax-free zones.

Late Wednesday, the mayor’s office released copies of its proposal for a tax-free zone, forwarding it to the City Council for its consideration. A City Hall source said similar packets would be forwarded to the state and federal governments next week.

Hayden, however, dismissed the proposal as grandstanding.

“Tax relief does not create inner-city jobs,” he said. “To go further with, ‘Yippee, let’s eliminate all taxes’ is a good headline. It’s not a program.”

Meanwhile, Riordan, who warms to the topic of education even though it does not fall under the mayor’s official purview, unveiled a proposal to create 15 multimedia academies over the next three years. Although Riordan did not pledge any city money toward that effort, he and his staff said they believe the academies can attract private and federal backing.

Riordan did not elaborate, but City Hall sources said the mayor’s office has lined up a major entertainment company to contribute $1 million in multimedia equipment, enough to open the 15 academies. Multimedia is one of the fastest-growing sectors of the city’s economy, and one of the few in which average salaries--even for entry-level positions--are high. It is also a sector in which many employers say they are unable to find enough qualified job applicants. As a consequence, many are recruiting employees abroad.

Wednesday’s address marked what has become an annual ritual for Riordan, an update on the city’s economy. In last year’s speech, the mayor declared that the city had “turned the corner” after years of recession; this year’s emphasized that progress was continuing and building.

But unlike his previous economic speeches, Wednesday’s took place in the middle of a campaign, and Riordan’s principal foe was ready with a response.

Hayden called a news conference at his Valley office, where he released his own economic analysis of the city, drawing starkly different conclusions from those presented by the mayor. Where Riordan cited a decline in unemployment and an increase of at least 20,000 jobs over the last four years, Hayden highlighted a concurrent increase in business failures and bankruptcies. And where Riordan focused on creating a hospitable climate for business and investment, Hayden suggested that the key to progress was improved race relations and living conditions.

“The mayor, he’s like the Wizard of Oz,” Hayden said of the incumbent. “There’s a certain fantasy aspect to everything he says.”

In particular, Hayden attacked Riordan’s oft-touted claim to having created at least 20,000 jobs. Hayden said the county’s unemployment rate, in fact, rose from 7.8% in 1995 to 8% last year. The senator also argued that there is no way to know whether new jobs in L.A. are held by city residents, and said any job creation is simply a result of the national economic uptick, not local policies.

“If any new jobs have been created, it’s not because of the mayor,” he said. “That would be like sun worshipers claiming credit for the sun coming up or Jack Nicholson claiming credit for Laker free throws.”

Although the mayor touted the establishment of the Community Development Bank during his speech, Hayden said the program needs a jump-start. Riordan recently said the bank had distributed 10 loans since its opening last year; officials Wednesday said it had approved “about 20” loans worth $18 million, with 60 more projects in the works.

“So what? Ten loans is less than paltry,” Hayden said. “There ought to be 500 loans or 1,000 loans.”

Addressing the city’s need for revenue, Hayden said “the most important, single, urgent and immediate issue concerning the economy of Los Angeles” is the nonpayment of taxes, which leaves government coffers for social programs thin.

A recent study showed 40% of property owners in the county are delinquent on their taxes, leaving $1.1 billion outstanding; another report shows a similar rate of noncompliance on city business taxes.

“Los Angeles is becoming a Rust Belt city. Little areas of the city are becoming ghost neighborhoods,” Hayden said. “The city, intentionally or not, is fostering an attitude of delinquency for back taxes owed. The city is moving toward a fiscal crisis steadily.”

One of the many issues that sharply divides Hayden and Riordan is the so-called “living wage” proposal, which would require city contractors to pay their workers salaries and benefits sufficient to maintain a standard of living above the poverty line. Although both candidates support the concept of paying workers a living wage--in fact, the idea has roots in the Catholic faith that Riordan and Hayden share--the two candidates disagree about the government’s role in insisting upon it.

Hayden supports the notion of imposing the wage requirement on city contractors. Riordan, by contrast, on Wednesday called it a “magic pill which socialist countries have tried all over the world and failed.”

Making the case for his version of economic development, Riordan cited what he called the “Hollywood Renaissance,” referring to the cleanup efforts in that area and the economic stability that has followed. City Council member Jackie Goldberg, along with strong community organizations in Hollywood, has helped to spearhead those efforts.

“The Hollywood Renaissance,” Riordan said, “is a success story in the making.”

Goldberg, however, said Riordan deserves only a fraction of the credit for what has happened in Hollywood. She praised Riordan and his staff for helping to hold on to one major business and to lure another, but beyond that she said most of the progress in that area has happened without the mayor’s direct involvement.

“Very little of what he’s talking about are things he had a role in,” said Goldberg, a frequent critic of the mayor.

Economic development and expansion of the city’s police force have been mainstays of Riordan’s four years in office, and the mayor has already pledged to continue those efforts if reelected. He has not always found adoption of his ideas simple. Hayden is quick to note that Riordan failed to keep his promise to add 3,000 police officers to the LAPD, and the mayor repeatedly has wrestled with an assertive City Council.

On Wednesday, Riordan did not refer to his City Council relations--nor to Hayden--in his prepared remarks. But as the mayor fielded questions, he did allude to the rough road he has occasionally encountered.

Asked what his happiest moment as mayor has been, Riordan paused, then broke into a wide grin and answered: “When the City Council recessed, I think.”