City of L.A. Committee to Work on Job Creation

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Even though local business groups are still smarting from their failure to stop city of L.A. leaders from raising the minimum wage to $15 an hour over the next few years, they are cheering a recent development: the creation of a City Council committee focused on job creation.

At the start of the current council session, Council President Herb Wesson set up an ad-hoc committee focused exclusively on creating more jobs in the city and named Councilman Paul Krekorian chairman.

The committee held its first meeting last week, listening to presentations about the state of the local economy and job-creation efforts.

“We want to see what the city is doing right, what we are doing wrong, identify the barriers for job creation and determine the best course for removing them,” Krekorian told the Business Journal.

The committee’s creation delighted local business groups, who called it the first time in decades that high-level leadership on the council had tackled the issue of job creation.

“In the 35 years that I have worked in the city, this is the greatest commitment from the City Council that I have seen to create a jobs strategy, and so I am cautiously optimistic,” said Leron Gubler, chief executive of the Hollywood Chamber of Commerce.

Ruben Gonzalez, senior vice president of the Los Angeles Area Chamber of Commerce, agreed, saying the leadership of Wesson and Krekorian is what separates this effort from past attempts at crafting job-creation plans.

But both Gubler and Gonzalez said they also have some concerns about whether the committee could actually boost job creation in the city.

Unless the city’s gross receipts tax is sharply reduced or eliminated, Gubler said, he expects the effort will come up short.

Gonzalez said he’s concerned that any plans the committee does put forward could be watered down by necessary political compromises with community, labor and environmental groups.

Likewise, David Fleming, founding chair of the Los Angeles County Business Federation and a former chairman of the L.A. chamber, said the committee’s good intentions could come up against a familiar roadblock: money.

“It’s definitely needed,” Fleming said of the committee. “The problem is most of the solutions for job creation have to do with money, specifically getting more money into city coffers from other sources to lessen the tax burden on business.”

Business Assistance

While the job-creation committee is looking at long-term strategies, the City Council is also moving to continue its business assistance program BusinessSource.

The program uses a portion of the city’s Community Development Block Grant funding from the federal Department of Housing and Urban Development to operate nine business-assistance centers throughout the city. Startups, small businesses and so-called micro-enterprises – businesses with less than $200,000 in operating income – can go to the centers and receive help crafting business plans and accessing capital programs. Private contractors help market the program to local businesses.

In the three years since the program started, the centers have spent $11 million to assist nearly 7,000 businesses and help create about 3,100 jobs, according to a city staff report released earlier this month. That’s about $3,500 a job.

The council is set to consider extending this program for another five years, through March 2021.

Redevelopment 2.0

Last week, Gov. Jerry Brown signed Assembly Bill 2, which allows local governments to set up financing authorities to replace the now-disbanded redevelopment agencies.

These financing agencies – known as Community Revitalization and Investment Authorities – would be limited to low-income areas and would have to win re-approval every 10 years. And, unlike the old redevelopment agencies, tax revenue diversions from the county and special districts could only be done with the approval of those government bodies. School districts, which saw their tax revenue tapped by the old redevelopment agencies, are now completely off the table.

Longtime downtown L.A. redevelopment consultant Larry Kosmont said the new authorities are better than nothing, but that there will likely be much less commercial redevelopment activity under these new authorities than under the old redevelopment system.

For starters, he said, the requirement that these authorities seek re-approval every 10 years could interfere with long-term private financing that developers need for their projects. Also, the ability of the county or special districts to veto their participation could sharply limit the amount of revenue the districts can generate.

“There will be reduced commercial redevelopment activity when compared to the old system,” Kosmont said.

But higher developer set-aside requirements in the legislation for affordable housing might mean more affordable housing projects will move forward, he said.

Staff reporter Howard Fine can be reached at [email protected] or (323) 549-5225, ext. 227.

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Howard Fine
Howard Fine is a 23-year veteran of the Los Angeles Business Journal. He covers stories pertaining to healthcare, biomedicine, energy, engineering, construction, and infrastructure. He has won several awards, including Best Body of Work for a single reporter from the Alliance of Area Business Publishers and Distinguished Journalist of the Year from the Society of Professional Journalists.

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