Prop. 209 Ruling Dominates Gathering

More than 1,000 women and minority business owners and their supporters gathered in Los Angeles on Wednesday, pledging to expand their efforts in the face of this week’s decision by the U.S. Supreme Court to let the state’s anti-affirmative action initiative stand.

Wednesday’s meeting marked the annual highlight of Minority Enterprise Development Week. But unlike previous events in that occasion’s history, this breakfast session unfolded under the shadow of the high court’s refusal Monday to review a lower court ruling that upheld Proposition 209, which bars the use of ethnic or gender preferences in awarding government contracts or doling out government jobs.

That ruling dominated talk at the morning conference, as speakers repeatedly alluded to it and participants worried about its possible ramifications.

“It’s really going to test the public sector,” said John Mack, president of the Los Angeles Urban League. “People need to be smart about this. We can’t let the demagogues control this issue.”

Proponents argue that Proposition 209 eliminates a form of state-approved racism in which certain people were given advantages by the government merely because of their ethnicity. Detractors respond that long-standing discrimination against women and minorities puts them at a disadvantage--in school, in business and elsewhere--and thus, affirmative action programs are needed to level the playing field.

Mayor Richard Riordan, a moderate Republican who opposed Proposition 209, did not refer to the initiative by name in his keynote address, but he alluded to it as he promised to protect minority- and women-owned businesses and to expand opportunities for them to develop and grow.

“It’s not about giving people any special privileges,” he said. “It’s about giving entrepreneurs the access they need to compete.”

Riordan attributed the bulk of Los Angeles’ recent economic vitality to businesses led by women and minorities and reemphasized what has recently become the centerpiece of his speeches across the city--the need to improve local education.

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Riordan has become increasingly strident in his criticism of public contracting programs that steer jobs to minority firms but fail to help those he believes are genuinely disadvantaged. Instead, the mayor complained that the programs benefit those whom he calls “the usual suspects,” often at the expense of more needy firms.

“The vast, vast majority of the economically disadvantaged have not been empowered,” Riordan said, a comment greeted with polite applause from the audience.

Before becoming mayor, Riordan was a successful venture capitalist, and Wednesday he advised business leaders on how to build thriving companies. The key, Riordan said, was to “deal only with the best,” and to concentrate on creating strong organizations, not reaping quick profits.

“Greed,” the mayor said, “will destroy you every time.”

At several tables, business executives traded ideas on how to expand and improve their businesses, both by capturing government work and by seeking new ways to attract private investment. Many of the firms represented Wednesday are eager to seek some share of the proposed Alameda Corridor, a $2-billion rail project that will link the Los Angeles port with the downtown train station. That project is expected to create more than 10,000 jobs and involve scores of construction companies.

In addition, the pending construction and operation of the downtown sports arena, as well as the proposed expansion of Los Angeles International Airport, offer potential business opportunities, several executives said.

But many also worried about how the money for those projects would be distributed in light of the looming abolition of affirmative action programs that have long helped steer a share of public works to companies owned by women or minorities. That fear was especially prevalent among owners of small businesses, several of whom said they were concerned about their ability to compete with more established--generally white-owned--companies.

For those firms, the Small Business Administration offers guidance and financial support. Agency officials were trying Wednesday to reassure executives that they will continue with that effort, regardless of the status of the state’s affirmative action laws.

“We’re all committed to . . . job creation, to ensuring that businesses become viable,” said Alberto G. Alvarado, district director of the SBA’s Los Angeles office. “The struggle goes on, whether there is something called affirmative action or not.”

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The agency sponsors a variety of loan programs, including ones that target companies that are owned, operated and managed by ethnic minorities and women. Proposition 209 would probably bar such programs if they are administered by the state or local governments because the initiative prohibits consideration of race or gender in awarding government business. But because the SBA is a federal agency, it is beyond the reach of the initiative, meaning that its programs are not affected, at least directly, by the Supreme Court action this week.

Another lender still establishing itself in Los Angeles but already a source of hope for some entrepreneurs operating in economically depressed areas of the city is the Community Development Bank. Like the SBA, it is backed by federal money, and it intends to concentrate loans in poverty-stricken neighborhoods.

Meanwhile, some participants at Wednesday’s conference said they hoped the effort to spread anti-affirmative action campaigns to other parts of the country would be thwarted.

Several commented on the experience this week in Houston, where voters solidly defeated a measure similar to Proposition 209. That heartened some conference participants, who said they hoped it would slow the momentum of future campaigns to knock down affirmative action.

Mack said: “That steamroller may not be moving as fast as they want it to be.”