Prudential HMO Leases Office Space Downtown
Despite having threatened to leave Los Angeles in a tax dispute two months ago, Prudential HealthCare instead has leased 300,000 square feet of office space downtown for a regional customer service center that will employ 1,400 people.
The deal, which aides to Mayor Richard Riordan say is the biggest infusion of jobs to downtown in a decade, was completed despite the company’s claim that business taxes in Los Angeles are too high.
The center, expected to be announced today by Riordan, Prudential and Wells Fargo Bank, which owns the building, will be in the Garland Building on 7th Street west of the Harbor Freeway.
To persuade the company to locate the center there, city officials promised to spend a million dollars to train workers from the Pico-Union neighborhood and other areas surrounding the building to work at the center.
The company can save another million dollars on its tax bill because the Garland Building is in a revitalization zone set up after the 1992 Los Angeles riots. To get the tax break, the company must hire people who live within the revitalization zone.
Riordan economic development aide Rocky Delgadillo, who handled the city’s negotiations with Prudential, said the toughest competition to the downtown site came from the city of Norwalk.
Altogether, he said, six communities competed for the center, but only Norwalk offered comparable real estate prices. The tax break and help on training made the Los Angeles deal sweeter.
It was just over two months ago that Prudential’s health maintenance organization joined four other HMOs threatening to leave Los Angles altogether unless they were granted relief from the city’s business tax. Negotiations on the tax are continuing, with a compromise reportedly near.
Peggy Lyle, spokeswoman for Prudential, said the decision to locate downtown was made separately from the company’s efforts to obtain relief from the city’s business tax.
But a source close to the deal said that the taxes did come up in negotiations.
“It was a very clear threat,” the source said. “They said ‘Look, we’ll go to Norwalk. We don’t want to deal with you.’ ”
According to Lyle, the regional center, one of four being set up by Prudential nationwide, would house 1,100 new jobs. About 300 positions will be moved to downtown from the company’s California headquarters at Warner Center in Woodland Hills.
