L.A. Community Development Bank

The Feb. 3 article on the Los Angeles Community Development Bank is misleading. The LACDB is an unqualified success. In less than three years, it has committed $70 million of the $100 million allocated to it to be lent in the Los Angeles empowerment zone. In doing so, it has expended less than $8 million for program support. The LACDB’s efforts to date will result in the creation or retention of 750 jobs and those jobs are made available to residents of the empowerment zone before anyone else. To report that the LACDB has created only 132 jobs to date ignores the fact that borrowers’ job-creation activities usually are implemented consistent with a business plan that provides for prudent and sustainable growth. It would be a recipe for failure if the LACDB were to require that a borrower create all the jobs expected immediately.

The LACDB has made 125 loans. The article relies primarily on two “borrowers” to make the case that the bank is “heavy-handed” and “interferes” in the operations of its borrowers. One of the two is a former officer of a borrower and was removed by the borrower for performance reasons, not because of any intervention by the LACDB. The other defaulted on his loan agreement to employ empowerment zone residents and to move into the empowerment zone. After about a year of working unsuccessfully with him, the LACDB had no choice but to call the loan.

The article also [falsely] alleges that the LACDB closed and funded deals in violation of federal regulations. The LACDB’s activities are monitored no less than every 90 days by independent outside auditors and, as a practical matter, almost on a daily basis by representatives of the city, the county and HUD. There has never been a single loan made by the LACDB that has violated federal law or regulations.

ANTONIO GONZALEZ

Chairman, LACDB