City’s Social-Change Agenda Has Business on the Defensive

As dozens of community groups and business lobbyists lined up before the Los Angeles City Council recently to talk about airport expansion, Los Angeles Area Chamber of Commerce Chairman Christopher Martin got a glimpse of the new political realities of City Hall.

Decades ago, business groups like Martin’s essentially ran Los Angeles, picking mayors and police chiefs and dictating the course of development. Now Martin was waiting in line while the city’s top labor leader, Miguel Contreras, breezed past the rail that separates the council from the public and exchanged bear hugs with council members.

“We were just a murmur in the voice of the community,” Martin said of the recent hearing.

Business is in a defensive crouch at City Hall, corporate executives and analysts say, a position that the current mayor’s race is unlikely to change.

Corporations still have a major effect on city business. The corridors of City Hall are lined with business lobbyists, and many individual companies can still have a huge influence on issues such as new housing developments or cable access.

But the city has also become a laboratory for a new approach to municipal governance that elates labor officials and unnerves some business leaders. This new way of governing includes forcing companies to raise salaries, to provide low-income housing and to dole out other community benefits.

For example, the city requires that its contractors pay a “living” wage and that big-box retailers such as Wal-Mart Stores Inc. go through an extra level of planning scrutiny before being allowed to open a store. The city is considering proposals that would require developers to include low-income housing in any new residential buildings and would compel hotels converting to condominiums to find a way to ease the blow for workers who lose their jobs in the process.

“We are on the leading edge of articulating a broader purpose and broader vision, that we need to take the lead of dealing with our problems in a more strategic way,” said Madeline Janis-Aparicio, executive director of the Los Angeles Alliance for a New Economy, which has pushed many of the new initiatives. She added that some have won business support.

The dwindling influence of business stems from a shift in the city’s demographics, analysts say. For much of the 20th century, a group of chief executives based downtown helped guide Los Angeles’ growth, giving their blessing to mayoral campaigns and engineering such key moments in city history as the taking of water from Owens Valley and the replacing of a neighborhood in Chavez Ravine with Dodger Stadium.

But many major corporations have since moved their headquarters out of Los Angeles while local fixtures -- such as the Dodgers, the Los Angeles Times, Atlantic Richfield Co. and some of the biggest banks -- have been acquired by outsiders.

Los Angeles has become a magnet for small businesses, many owned by immigrants, that exercise minimal political clout individually or collectively. The Chamber of Commerce, which once included executives from numerous Fortune 500 companies, today is heavily composed of mid-sized businesses such as Martin’s own 83-person architectural firm.

High-profile corporate leaders, such as philanthropist Eli Broad, pursue individual economic agendas directly with elected officials and don’t attempt to speak for the business community.

Business leaders in Hollywood -- the region’s most famous industry -- are much more focused on influencing politics in Washington and around the world, paying scant attention to local government beyond getting permits for film shoots.

“They may make and post-produce their product here, but it’s an international product,” said Martin Cooper, chairman of the Valley Industry and Commerce Assn. Walt Disney Co. and other companies are active in the association, he said, “but their concerns tend to be much broader than the city.”

Corporate leaders and analysts say that fragmentation marginalizes the local business community.

“There was a time 40 years ago when business was what labor is today ... more of a coherent political force,” said Raphael Sonenshein, a Cal State Fullerton professor who has followed Los Angeles politics for decades. “But now you have the old downtown business establishment, you have the valley business world, you have the minority business world. They don’t speak with a single voice.”

The disinterest in business issues has been clear during the mayor’s race, which has pivoted on matters of crime, education and trust.

“Business issues have just been shoved to the side,” said Jack Kyser, chief economist for the Los Angeles County Economic Development Corp. Mayor James K. Hahn and his challenger, Councilman Antonio Villaraigosa, both addressed the economic group’s board, Kyser said, and neither mentioned business issues.

The lack of interest, however, is something of a two-way street. With no one group or leader speaking for business, there is little consensus on what business issues the next mayor should address.

The city has little power over issues that matter most to companies, such as workers’ compensation costs and overtime regulations. Those decisions are made in Sacramento.

Businesses certainly are actively lobbying to win individual contracts or approvals for new developments. But these issues are pushed by specific companies, rather than a wide section of the business community.

Therefore, the top agendas of many business groups focus on broader issues, such as traffic and transportation, that are not thought of solely as business issues. Many businesses also want a mayor who is a salesman for Los Angeles.

The Chamber of Commerce’s dozen top priorities for Los Angeles’ next mayor, for example, include more cuts in city business taxes, having a more efficient government, improving public safety and transportation, more aggressive marketing of Los Angeles and curbing the influence of unions at City Hall.

Indeed, a distaste of organized labor’s increasing clout is shared among local business groups. While business and labor agree on some issues, such as the expansion of Los Angeles International Airport, labor has pushed proposals, such as a requirement that city contractors pay higher wages, that business interests have fought.

While both mayoral candidates boast backing from business groups or high-profile business leaders, both also are Democrats with strong ties to the labor movement.

Of the two candidates, observers say Hahn seems to have slightly more appeal for business leaders than does Villaraigosa, a former speaker of the state Assembly.

“I consider Antonio -- and this is said as a compliment -- Antonio is a flaming liberal, Hahn is a centrist,” said Joe Cerrell, a veteran Democratic political strategist who is not working for either candidate. “The business community that I speak to is a little nervous about” Villaraigosa.

But Cerrell and others said that Los Angeles’ business community was so broad and diverse that it was hard to sum up which candidate executives really preferred. “It’s not a voting bloc,” Cerrell said. “It’s easy to identify by geography or race, but less so [by] ‘the business community.’ ”

Hahn positions himself as a can-do, non-ideological mayor. He touts his endorsement by the Chamber of Commerce, his efforts to redevelop downtown and his work in cutting city business taxes.

Portraying himself as more energetic and visionary, Villaraigosa lays out a plan for making Los Angeles a hub of commerce -- “the Venice of the 21st century” -- by boosting its regional airports while bringing cutting-edge industries such as biotechnology and renewable energy to L.A.

The candidates have sniped at each other over business issues. Hahn contends that Villaraigosa is an anti-business ideologue. “He might like to get a lot of applause when he goes to a big rally by being really strident,” Hahn said in an interview, “but I’m one of those people who likes to get something done.”

Villaraigosa says that the mayor lacks vision and energy to help Los Angeles grow, and blasts Hahn’s administration for failing to complete the paperwork required in the competition to house the state’s new stem cell research institute.

“There’s a breadth of CEOs and leaders across the city who believe the business community can’t afford four more years of Jim Hahn,” the councilman said, rattling off the names of executives who back him, such as developer Robert F. Maguire and Lynn Pike, president of Bank of America Corp. California. “There may be some policy differences, but there’s a sense in the big business community that we need a leader.”

Both candidates backed a controversial law last year to add another hurdle to the process required to approve new big-box retail stores. But Hahn has been more cautious than Villaraigosa about other proposals that would use Los Angeles’ regulatory power to force social change.

Most notably, the mayor opposes a so-called inclusionary zoning policy that would force developers to add low-income housing to new projects. Villaraigosa says he supports the idea but has problems with the specific proposal that surfaced in a City Council committee this year.

To some business leaders, such as Carol Schatz, president of the Central City Assn., such proposals are part of a troublesome trend. She says the regulations “put up a huge billboard to the world that you’re responsible for mending all these social problems and you’re going to have to do it on your own back.”

Advocates say that complaint is motivated by an antiquated approach to economic growth.

“It absolutely is a clash of perspectives, a clash of ideas,” said Janis-Aparicio of the Los Angeles Alliance for a New Economy, which has pushed both the big box and inclusionary zoning ordinances. “The traditional approach ... is small government, little taxation. Part of what we’ve been doing over the past 10 years is looking at how to get the city to realize better outcomes” from development.

But the mayor only has limited control over that, analysts agree.

“We have a very weak mayor,” said Chris Thornberg, a senior economist with the UCLA Anderson Forecast. Los Angeles mayors, he added, “have never had the sort of command and control that you might want the mayor to have.”

Most of the power resides within a network of city commissions and the 15 City Council members. Thornberg recalled working with City Hall to cut business taxes in 2003 -- a long-sought business goal and one of the Hahn administration’s most-cited achievements. The process, he said, was completely opaque and took place largely behind closed doors.

“The council makes the decision,” Thornberg said. “A lot of what happens is deliberately obscured by politicians.”

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Out of L.A.

A sampling of companies, once based in the Los Angeles area, that have moved their headquarters or were acquired by outsiders:

* Atlantic Richfield, acquired by London-based BP

* Broadway and Bullock’s stores, acquired by New York-based Federated Department Stores

* Continental Airlines, now headquartered in Houston

* First Interstate Bancorp, acquired by San Francisco-based Wells Fargo

* Great Western Bank, acquired by Seattle-based Washington Mutual

* Home Savings, acquired by Washington Mutual

* Lockheed, now part of Bethesda, Md.-based Lockheed Martin

* Ralphs Grocery and Food 4 Less, acquired by Cincinnati-based Kroger

* Robinsons, acquired by St. Louis-based May Department Stores

* Security Pacific National Bank, acquired by Bank of America, now based in Charlotte, N.C.

* Southern California Gas, owned by San Diego-based Sempra Energy

* Thrifty Payless, acquired by Camp Hill, Pa.-based Rite Aid

* Times Mirror and its Los Angeles Times unit, acquired by Chicago-based Tribune Co.

* Vons, acquired by Pleasanton, Calif.-based Safeway

* Western Airlines, acquired by Atlanta-based Delta Air Lines

Source: Times research