No Miracles for L.A.’s Economy

What can city government really do to help a local economy? Los Angeles may find out in the next few months if Joy Chen, the city’s director of economic recovery, can kick-start a few projects and raise some enthusiasm. But it’s a longshot.

After the Sept. 11 terrorist attacks, Mayor James K. Hahn appointed Chen, an energetic veteran of the real estate development business, to head a new effort to assist displaced workers, stimulate the economy and revive travel and tourism in Los Angeles and Southern California.

But Chen’s job is a six-month appointment--and one month already is gone. Also, she has no big budget to hand out incentives to business--not with tax revenues to the city running $71 million below anticipated levels, thanks to the downturn.

So, can Chen or anybody in City Hall move the giant local economy?

Yes, in fact, there are several ways Chen--with the mayor’s backing--can help the economy. But don’t look for miracles. Even a large government like that of Los Angeles, which employs 34,500 people and takes in almost

$5 billion a year in taxes and fees, cannot run like a private enterprise.

That is, a government agency can’t simply hire a contractor and get a project going to build a community center or a police station, which would create jobs. Even speeding up work on existing city programs is a challenge.

City Hall has power, to be sure, but it’s political power: It can organize vast public and private funds for long-term developments, and at the other end of the spectrum it can direct benefits to the poor.

Chen’s office launched a program this month to help keep lights and heat on this winter for more than 30,000 workers displaced by the downturn in travel and tourism.

Hahn is asking the Department of Water and Power to reduce utility bills for the displaced workers, at a total cost of $800,000, and Southern California Gas has agreed to donate $100,000 to the initiative.

“It’s unprecedented for city government to reach out to working people,” says union organizer Madeline Janis-Aparicio, head of the Los Angeles Alliance for a New Economy.

Chen also hopes to unlock big money by removing bottlenecks on more than $1 billion worth of city projects for which funding has been approved by voters but which have not been started because of slow government procedures.

Chen has a long list of such projects--ranging from a solid waste yard for the East Valley to a community center for Boyle Heights to street and bridge improvements--that could spark spending of almost $75 million.

Why are such programs stalled? Chen blames bureaucratic bungling.

“Take Recreation and Parks,” Chen says, referring to a city department with 1,980 employees and an annual budget of $182 million. “Their specialty is devising recreational programs for children and adults. But when they get an order to build a community center or gymnasium, it doesn’t work. They need a construction manager.”

But with 43 stalled projects in the city, there’s obviously more to it--squabbles among City Council members, Los Angeles’ famed resistance to building in residential neighborhoods (developers joke that the acronym for the city is BNNANA : build nothing near anyone at no time anywhere).

The bottom line is that since the city’s Economic Impact Task Force identified 43 stalled projects six weeks ago, the Hahn administration hasn’t moved forcefully on a single one. Chen says she will bring in “professional management” to spur city efforts, but acknowledges that in government, “it takes 12 months to hire a consultant.”

Government work is different, says developer Steve Soboroff, former mayoral candidate and city parks commissioner, who now is president of the Playa Vista development. In private industry, contractors can be fired if they don’t perform.

“But in government, you have to go to court to fire a contractor. And they can enter a low bid on another job and you’re forced to hire them again,” Soboroff says.

That explains why government is not designed to give quick boosts to the economy. However, government’s role is essential for long-term development.

Recall, for example, the early-1990s recession. When the aerospace-defense industry cut back after the Cold War, there were hurried proposals from the state and federal governments to convert aircraft plants to production of mass-transit vehicles. Studies were drawn up, but little was done.

Yet the Southern California economy revived on the strength of foreign trade, which grew tremendously and spawned the new industry of warehousing, freight forwarding and finance that is called logistics.

No government program could have predicted the logistics industry, which is one of this region’s largest employers today.

But logistics and the tremendous complex of Los Angeles and Long Beach ports would not be the force they are if government had not taken long-term actions a decade ago. “The [Tom] Bradley administration laid the groundwork by enlarging the ports,” says attorney George Kiefer, a key advisor to Hahn.

Bradley didn’t man a dredge to deepen the harbor, of course, but his administration organized the necessary regulatory approvals and federal, state and private financing.

More recently, the Riordan administration gave additional support to foreign trade by shepherding federal and private money into the Alameda Corridor rail and truck project.

The Hahn administration’s first long-term focus will be housing, a critical need for Los Angeles. Chen will promote Hahn’s $100-million housing trust fund to give developers initial capital so they can get financing from banks and qualify for funds from other government agencies.

“Los Angeles lags behind Oakland and San Diego in gaining our fair share of federal and state funds for rent subsidies and housing,” Chen says. She aims to correct that lag.

“Government has a much-broader mandate than business,” says Chen, who managed construction of a Catellus Development Corp. residential and commercial project in San Diego before coming to public work in Los Angeles. “Government must balance efficiency with making sure that people are not left behind.”

The U.S.-born daughter of immigrants from China, Chen first exercised her political skills working in a nonpartisan role in Taiwan’s first elections in 1987.

“I was interested in how communities are formed, how cultures live next door to each other and create town rules and pay for government,” Chen says.

Undoubtedly she’ll learn a lot more in the next few months.

*

James Flanigan can be reached at jim.flanigan@latimes.com.