5 Years Later, a Mixed Legacy of Rebuilding

Standing on the porch with her grandchildren, Helen Johnson watched with despair as her South-Central Los Angeles neighborhood burst into flames April 29, 1992. But within a few months of the riots, she saw a glimmer of hope.

Corporations she had never seen in her part of the world came with the thunder of a cavalry, promising to invest hundreds of millions of dollars to revitalize riot-stricken and neglected areas of Los Angeles. Vons led the charge with the largest single pledge--$100 million--to build a dozen supermarkets, including one in Johnson’s community on an abandoned lot at Vermont and Slauson avenues.

“At last, we are going to have choices,” Johnson, a retired school custodian, repeated to herself and neighbors.

But her wait was in vain. After four years of taking steps to build there, Vons said it recently gave up on the site for economic reasons. “It would not serve us or the community to build stores where it doesn’t make economic sense,” said Vons spokesman Doug Hendrix.

By its own count, Vons has opened only four of 12 pledged stores--and that includes one in North Las Vegas. The company has yet to begin construction in any part of South-Central, the heart of the riot zone. Officials of Vons, which was purchased by Safeway in a deal completed earlier this month, stressed that they are still trying to develop plans to open stores in the inner city.

“They yank you around and give you all these hopes,” said Johnson.

Five years ago, economic hopes flourished in the wake of the nation’s worst rioting of this century, which over three smoldering days took at least 53 lives, injured 2,300 people and damaged more than 1,100 buildings. Unlike the Watts riots in 1965 and riots in Detroit and Newark, N.J., what followed the 1992 unrest in Los Angeles was a unique rebuilding attempt led not by government, but by the private sector.

Optimism spread as Rebuild L.A., the private recovery agency formed at the behest of government leaders, announced one corporate pledge after another. Reflecting its ambitious goals, Rebuild L.A. (later renamed RLA) gave itself a five-year life span to do its work.

Now, as the official riot recovery organization ceases operation, it leaves a legacy of lowered expectations, scattered successes and broken promises. In short, the strategy of relying on the private sector proved to be no panacea.

“In the final analysis, there’s been a modest improvement, but nothing substantial,” said Don Mullane, Bank of America’s executive vice president of corporate community development in Los Angeles.

Linda Griego, who took the helm of RLA in early 1994, said the heightened expectations created by the agency early on and the glaring absence today of more inner-city supermarkets--a principal component of the rebuilding plans--clearly have colored people’s perceptions.

That’s not to say there haven’t been improvements in parts of the inner city. Some companies, such as Chief Auto Parts, met or even exceeded their public commitments to expand in South-Central and surrounding communities. Small manufacturers, entrepreneurs and grass-roots economic groups also surfaced after the riots, helping rebuild burned-out strip malls and create jobs, with little publicity.

But on the whole, most agree, economic development in riot-stricken areas has been relatively sparse and painfully slow. Although businesses marred by the riots generally did not pull out of the inner city, as many did after Watts, there was no mass infusion of investments either.

In its final report to be released this week, RLA estimates that corporate investments for riot recovery over the last five years totaled $389 million, although a good chunk did not go to the riot-torn neighborhoods. Government agencies, meanwhile, disbursed almost $900 million, most of that in federal emergency assistance and business disaster loans, according to RLA.

Taken together, the spending amounted to only a fraction of the $6 billion that RLA’s consultant, McKinsey & Co., said would be needed to revitalize impoverished areas of Los Angeles.

“Companies promised millions, and we didn’t see it,” said Councilwoman Rita Walters, whose district stretches from downtown to South-Central and was the hardest hit by the rioting.

“We simply didn’t see it.”

Disputes Over Pledge Amounts

Just how much was pledged to riot recovery and by whom has been a persistent source of controversy.

The earliest estimates by Rebuild L.A.’s initial czar, Peter V. Ueberroth--that 500 corporations from three continents were developing plans to invest more than $1 billion--proved too optimistic.

RLA now says that 44 corporations committed $497 million for various riot recovery programs, including business development and job training. Of that, $389 million has been spent, says RLA, which acknowledges that some of the investments were hard to gauge because commitments were vaguely stated and that some companies changed their figures or were reluctant to disclose details.

Moreover, questions have emerged about whether some of the investments, no matter how well-intentioned, were substantive or fit directly into riot recovery.

Among the corporate investments counted by RLA were: L.A. Gear and Eurostar Inc.’s one-time giveaway of shoes and clothing valued by these companies at $250,000; European travel packages, offered by British Airways to 20 students for their post-riot community work, said to total $100,000; $1 million from Kaufman & Broad and contractors to rebuild Camp Hollywoodland, whose facilities were destroyed by fires in early May 1992. The summer camp, in the Hollywood Hills, has special rates for low-income families, and visitors come from throughout Southern California.

Other spending that was announced as riot recovery commitments was already ongoing at the time of the riots. Southern California Gas Co.’s home weatherization campaign was part of the company’s $20-million investment. But that effort, designed to make older houses across Los Angeles more energy-efficient, had actually been in operation since 1983.

Some companies now say they contributed more than they pledged.

Southern California Edison committed $35 million in a wide-ranging program that included funds for job training, community and business grants and loaned executives. In an initial interview, Edison Vice President Mike Mendez said the company was $2 million short of fulfilling its pledge. (RLA said the shortfall was about $4.6 million.) But after recalculations, Mendez said the actual investments exceeded the commitment by $2 million. The difference: the company’s investments in a refrigerator recycling program--a program that stretches from Oceanside to Santa Barbara.

“I don’t see another five-year pledge,” Mendez added, “but we have an ongoing commitment to help improve this region.”

Smart & Final, one of the most active corporations in the inner city since the riots, also revised the figures on its commitment, which was announced in August 1992 as $50 million over three years to open 12 stores.

Smart & Final now says it spent $51 million on the effort. But that amount includes $8 million to revamp its Vernon headquarters and also takes into account money it will pay in the future on long-term leases--typically for 20 years--on the store sites.

The firm, which operates warehouse-style food stores, has built 12 outlets--although among them are new ones in West Hollywood, Bell and North Hollywood, all far from the heart of the riot zone.

Smart & Final has long operated profitably in urban neighborhoods. “This is unfinished work,” said President Roger Laverty, noting that he is looking to expand further.

Community leaders note that a number of business expansions cited by RLA, such as fast-food and auto parts outlets, would have occurred with or without the riots.

“The irony is that most of them were going to be here anyway by virtue of the marketplace,” said Carlton Jenkins, chairman of Founders National Bank of Los Angeles. “They’re simply reacting to demographics.”

Among the “very few permanent legacies out of it all,” Jenkins said, was his own institution, which received a capital infusion of $3 million from Arco, State Farm and the Auto Club of Southern California. He said that enabled Founders, the only black-owned bank in Los Angeles, to make loans 10 times that amount, open three more offices and hire an additional 60 people.

Without more local business ownership, he said, “the community itself will never change. . . . No one focused on this problem of disenfranchisement.”

One of the few corporations that never hesitated in rebuilding and expanding in Los Angeles’ inner city was Chief Auto Parts. A few days after the riots, Simon Smith, head of Chief’s Southland stores, flew to Chief Auto’s corporate headquarters in Dallas and got approval to rebuild the 29 stores looted and damaged and the seven that burned to the ground.

In addition to fixing those stores, Chief Auto built 17 stores within a year at a cost of $15 million. Since then, the company has opened 15 additional outlets. For each one, Chief hires 10 to 12 employees who earn an average of $7 an hour, Smith said.

Other auto parts retailers, including Kragen and Pep Boys, have followed suit. Industry executives say demand for their products is growing as more Latino immigrants settle in places such as South-Central.

While these stores have provided hundreds of jobs for inner-city teenagers, some community leaders wonder whether enough is enough.

“The community doesn’t want auto parts stores on every major intersection,” says Marva Smith Battle-Bey, executive director of the Vermont-Slauson Economic Development Corp. “They think we’re a dumping ground for those businesses.”

Conversion of Liquor Stores

Driving along the streets of his district, Councilman Mark Ridley-Thomas points to a brand-new strip mall at Vermont and 36th Street, across from the gate leading to USC.

“This was a very nasty, run-down strip with a large liquor store that was destroyed,” he said. Now, there is a Smart & Final, a Taco Bell, a sporting goods store and a family salon--all built within the last two years.

“It makes a nice statement when you drive by here,” he said. “Before, it was the pits.”

Economic development has progressed broadly near USC. But changes on a smaller scale are visible in other parts of Ridley-Thomas’ district as well.

Among other things, Ridley-Thomas has focused his efforts on converting damaged liquor stores into other enterprises. Thus far, he says, condos, coin laundries and even a credit union have replaced 13 liquor stores. Before the riots, more than 200 liquor stores dotted his 16-square-mile district. But a majority of them were damaged during the riots, he says, and now there are fewer than 100.

Thomas drives to a flash point of the riots, at Florence and Normandie avenues--where the beating of truck driver Reginald O. Denny was graphically caught on video. The corner is symbolic of how development has moved in the heart of South-Central.

On one corner is a spanking new Pep Boys Parts USA, an auto supplies store. On another, a blue tarp has closed off a Chevron service station that is being refurbished. Across the street is the long-standing Tom’s Liquor, where a few young men loiter in the parking lot. On the fourth corner, an empty lot with fragments of a burned-down Shell station rots away as community activists try to lure a franchise hamburger restaurant.

“Corporate response has been relatively muted,” Ridley-Thomas said.

He and others credited much of the inner-city business and housing development to small-time entrepreneurs and community groups.

Terdema Ussery and his brother, Wallace, spent three years scrounging up the $1.1 million from various public and private sources needed to build a 11,000-square-foot grocery, called Triangle Market, which they have built on a vacant lot in the 2600 block of Western Avenue.

Better-known entrepreneurs, among them Earvin “Magic” Johnson, have also emerged to build in South Los Angeles. Nonprofit agencies and grass-roots community groups have constructed low- and moderate-income housing, with the help of federal grant funds.

Although Los Angeles officials say they have tried to help the recovery by speeding up the permitting process, financing from the city and state has been hard to come by. California and Los Angeles provided about $56 million toward rebuilding over almost five years, according to RLA.

Could more have come had the public sector not taken a back seat in the recovery process?

Many have raised that question since Gov. Pete Wilson and then-Mayor Tom Bradley, faced with their own budget crises, opted to put the recovery efforts in the hands of the private sector.

Griego now says that some of RLA’s struggles were inevitable. “It clearly was a new experiment in having the private sector take the lead in a recovery,” she said, adding: “I’m not sure anybody knew what that meant.”

RLA’s first approach was to line up as many commitments from corporate America as possible, but after much of that turned out to be more hype than real, Griego came on board and shifted the agency’s energies. She focused on assessing community needs, developing information and directories for business, and helping firms in various industries hold round-table meetings.

Supermarkets a Key Need

An RLA survey in 1995 found that inner-city residents, by an overwhelming margin, said what they need most are supermarkets. In its study, the agency determined that there was one supermarket for every 16,571 people in the riot area. That compares with one for every 7,795 people in greater Los Angeles.

After the riots, 19 new inner-city stores were pledged, 12 of them by Vons, three by Food 4 Less and four by Ralphs. The supermarkets accounted for $164 million--or almost a third--of the total corporate commitments.

Food 4 Less said it has kept its promise. Ralphs said it has also built all four of its pledged urban supermarkets--although one, a spokesman said, is in North Hollywood and another in Monterey Park.

Vons acknowledged in the summer of 1992 that it did not have an adequate presence in the inner city. That year, the firm identified several sites, none appearing more promising than the one at the corner of Vermont and Slauson.

Vons already owned the three-acre property, where a Jerseymaid Milk plant had closed down years previously. When Vons announced plans to build a 55,000-square-foot store, the community rallied behind the company.

Jay Park, owner of a wig shop around the corner, remembers going to his first City Hall hearing along with neighbors to ask that Vons quickly be granted the necessary permits.

Most community leaders and residents never had any doubt that Vons would build. In a February 1993 letter to the Vermont-Slauson Economic Development Corp., Vons’ then-Senior Vice President Curtis Barlow said, “Competition is generally weak” in that area. “We are now moving forward with the development plans,” he said, noting that the store would employ 125 people who would earn an average of $13.42 an hour.

The company razed the Jerseymaid facility, bought two adjacent parcels of land and began soil cleanup work. Even as late as last spring, Vons assured community and city officials that the store would open in late 1997. The Community Development Agency of Los Angeles 1996 annual report included a Vons-composed drawing of the proposed supermarket. Vons raised expectations, erecting a billboard half a block away on Slauson, which remains.

Battle-Bey remembers the excitement. “People were saying, ‘Wow! We’ve got some new interest in the community--a store that’s never been here, a large retailer that’s in the suburbs is coming here.”

But last September, in a meeting with Councilwoman Walters, RLA’s Griego and others, Vons’ Chief Executive Larry Del Santo broke the news: The company was shelving the plan because “inner-city economics just don’t work out in this case,” according to notes taken by RLA at that meeting.

Del Santo and other senior executives at Vons declined interview requests, with a spokesman saying they were busy wrapping up the purchase of Vons by Safeway. Vons spokesman Hendrix said two independent studies indicated that the company could not be successful at Vermont and Slauson. He declined to provide copies of those studies. Hendrix also said the change in plans had nothing to do with the firm’s new ownership.

Community residents now cringe as they pass the empty lot, which is enclosed by barbed fencing and covered with waste and garbage. They shake their heads and talk about what might have been.

“Vons had a lot of push behind them, a lot of goodwill,” said Battle-Bey.

Had it gone up, she said, “It could have spurred a lot more development up and down Vermont Avenue. It would have been a statement in itself.”