Building A More Sustainable Economy One Neighborhood at a Time

Michael Kelly
Executive Director for The Los Angeles Coalition for the Economy and Jobs

Next year will mark the 25th anniversary of the L.A. riots. Though many of the issues that helped fan the flames of the unrest – poverty, unemployment and crime – still persist in the neighborhoods of South L.A. (and other parts of the region), there is a growing sense that change is coming. The question is – to whose benefit.

The leading change agent is L.A. Metro and its relatively new $1.5 billion Expo line extension from downtown to Santa Monica. This project is one of a number of public and private infrastructure investments ($6 billion plus) that are already transforming neighborhoods on the periphery of South L.A. Projects include, the University of Southern California’s “Village” development (2017), a Major League Soccer stadium in Expo Park (2018), Metro’s Crenshaw Line expansion from West L.A. to LAX (2019), a NFL football stadium in Inglewood (2019) and The Reef Project (2019). These dollars are also funding and stimulating additional investments in housing units, retail and conference space and new hotels.

Progress has not arrived overnight. For years South LA’s communities were witness to multiple ribbon cuttings – Marlton Square, District Square and Vermont Knolls – that have been delayed for decades or just stalled completely. The 22-acre Marlton Square (formerly known as Santa Barbara Plaza) was first identified as a prime site for redevelopment in 1984 by then-Mayor Tom Bradley. Now, thirty-two years later, Kaiser is set to open (spring 2017) a community center anchored around healthy living – primary and specialty care. The recently announced $1 billion-plus redevelopment of 49-acres at Jordan Downs – 1,410 new housing units, parks and commercial space – took 10 years to get off the ground, and if all goes well it may take another ten years to complete. Other attempts to market the region – the rebranding of South Central L.A. to South L.A. – never achieved its intended outcome.  Other efforts to attract more private sector investment to this region of L.A. by private investors, never reached full potential.

The lack of investment shows. South L.A.’s aggregated poverty rate stands at 45 percent – three times the national average – its unemployment rate is 12 percent and its high school dropout rate is nearly 50 percent. Homeless encampments line some of the streets and residents lack healthy food and recreational opportunities. Council district 9, which hugs the 110 freeway from the east and west, just south of downtown, has a population in which 81 percent of the residents have a high school degree or less, while District 11, just west along the coastal region near LAX, has a population with the highest education attainment rates – 81 percent of its residents have completed some level of college studies. (Though one lesson we should all learn from the media’s and pundit’s coverage of the recent election – using the terms “uneducated and college educated voters” heavy discounts the fact that millions of so-called “uneducated” Americans are very accomplished individuals who have obtained skill sets from many different pathways not always recognized through the nomenclature of academicians and economists.)

As progress is being made on the big ticket infrastructure items, private and public sector leaders need to continue to focus on providing South L.A.’s greatest asset, its people, more opportunities to benefit from the region’s expanding economic success.

Research has shown that the ability to create pathways to economic opportunity for low-and middle-income individuals and families, is rooted in neighborhoods and a willingness from the public and private sectors to invest in neighborhood infrastructure.  This includes affordable housing, small businesses, parks, health and educational services, to name a few.

A broad and diverse group of community leaders from parts of South L.A. – Vernon-Central, South Park, Florence, Exposition Park, Vermont Square, Leimert Park, and Baldwin Hills/Crenshaw neighborhoods (population – approximately 200,000 people) – have already embraced this strategy. This past spring they secured a designation in the Federal Government’s “Promise Zone” program. Their goal is to mirror the success of L.A.’s other “Promise Zone” just north of South L.A., which has secured more than $150 million since 2014, to support programs in education, workforce development, healthy food access and other economic opportunities.

City Hall has also stepped up their economic development efforts. This fall the City Council, with the help of the Mayor’s Office and external groups (including the L.A. Coalition) passed a Jobs and Business Advancement in Los Angeles Action Plan. This will strengthen the City’s role in fostering economic growth and the creation of more quality jobs in the region by providing more targeted resources to L.A.’s local businesses and residents in communities most in need. Two of the key initiatives – real estate and procurement – were developed from the Coalition’s work with the Mayor’s Operations Innovation Team.

The challenge now is how to best align and leverage these new opportunities to create a more inclusive and sustainable economy for South L.A. and the rest of the region. Below are some ideas:

Real Estate: The City of L.A. (and all public entities in CA) are landlords, responsible for managing a portfolio of taxpayer owned properties. Recent research from the Mayor’s Operations Innovation Team and the City Controller shows that the City manages approximately 9,000 parcels, including land at and around its airports and the Port of L.A., as well as properties owned by the Department of Water & Power. The City’s Jobs Plan highlights the need to better manage and optimize the most underutilized properties for economic and community development, as well as to generate revenue for much-needed City services. (This process is separate and distinct from the surplus property process.)

This will require a few key elements. First – the need to create a more centralized real estate management team that has the skill sets to manage the City’s real estate portfolio. For now, a special asset management unit within the City Administrator’s Office is leading an initiative to develop nine City-owned parcels, with the support of private sector developers, for affordable housing.

Second, as the City begins to bring all of its properties on-line in the next few months, it is critical to have a long-term structure in place to manage an increasing demand to do more with underutilized City-owned assets. A recent McKinsey Global Institute report highlighted an opportunity to develop South L.A.’s Firestone Metro Station into housing units, co-located with jobs centers and diverse street-level uses. L.A. can learn from other Cities as well. Cleveland is famous for innovations that have “re-imagined” hundreds of vacant lots. Neighborhood Progress Inc. of Cleveland offers residents an impressive guidebook for addressing vacant space.

Thirdly, community leaders in the twin Cities of Minneapolis and St. Paul are using investment cooperatives to help encourage small businesses to have local ownership of the property in their communities. City Hall could step up any and all efforts to help community leaders connect with nonprofits and philanthropic leaders to encourage this model, or ones like it, to incent investors to invest dollars to strengthen South L.A.’s neighborhood infrastructure, i.e. – laundromats, supermarkets, childcare centers, parks. The key to an investment cooperative is the ability to set a lower initial member investment threshold for local residents/businesses, then have the philanthropic community match them dollar for dollar, or at an even higher ratio to get projects moving on key available public and private parcels or blighted properties. (This may require incentives to deter long-term land speculators.) The fact is there are more than enough federal, state and local government economic development programs and resources to spur economic development, such as New Market Tax Credits, Empowerment Zones, Tax Increment Financing, etc. Let’s use every available tool we have.

Procurement: The City and County of L.A. spend more than $15 billion annually procuring goods and services. (When you add in LAUSD, the County’s Schools and local private and public institutions, you have an enormous procurement spend.) Not enough of those dollars are benefiting local businesses in L.A., specifically women and minority owned businesses. Currently, less than one half of one percent of women owned businesses in L.A. do business with the City, and even if they wanted to, there is a three and a half year backlog to be certified.

Research shows that small businesses (one to 249 employees) create an even greater share of jobs in high poverty, high unemployment inner city neighborhoods and they serve consumers (e.g., restaurants, retail, and local services, such as dry cleaners) and create amenities that make neighborhoods more attractive places to do business. Last year officials in Baltimore responded to local unrest and a poorly performing economy by putting into place policies that better leverage their procurement spend by increasing the contracts awarded to small businesses. Their goal is to recalibrate City rules to help small and women- and minority-owned businesses compete against bigger, more established firms that might otherwise submit lower or more qualified bids. Johns Hopkins University followed suit by announcing their own goals for a build-, hire- and buy-local initiative, which targets small local firms.

The Port of Houston provides contracting opportunities and market information to small businesses to connect them to the transportation and logistics cluster opportunities, which is a dominant cluster in the Houston metro area that experienced a slight decline in employment for the past decade, but a substantial increase in small business establishments. The good news. L.A. City and County policymakers are now looking at more effective ways to leverage their spending dollars to benefit local businesses. Though they are keenly aware that any potential revenue gains need to be weighed against total potential job creation impacts – direct and indirect – when City Hall decides how best to allocate resources to support small and large business growth. Ultimately the success of this initiative will be linked to additional efforts to provide small businesses opportunities to obtain capital, business training, counseling, and mentoring.

The L.A. Coalition’s partnership with the FUSE Corps fellowship program has placed a fellow at LAX for 2016-2017 to develop s strategy to leverage its $8.5B capital improvement plan to engage more of their community in this improvement project and ensure area residents have the skills and resources needed to compete for jobs and contracts.

Workforce Development: Residents of SouthLA need better access to educational and skills development initiatives that will propel them into good paying jobs and/or provide them with the skills and resources to start or grow a local business. Research shows that many residents of distressed inner city neighborhoods require more intensive models of training and workforce readiness beyond what traditional workforce development programs can offer.  With the right tools – tax incentives, wage subsidies, pre-employment training, and work-readiness preparation, we can help close gaps between job seekers’ skills and the opportunities heading South L.A.’s way. There are seven industry clusters prime for more skilled workers: entertainment, renewable energy, transportation, construction/facility services, utilities, IT/professional services, healthcare/social services.

L.A. Trade Tech College is at the forefront of workforce development thanks to three key developments. Mayor Garcetti’s College Promise program, which will waive all tuition fees for any LAUSD student who attends one of L.A.’s nine community colleges full-time beginning in 2017. Second, L.A. County voters just approved a bond measure that will allow L.A. Trade Tech the dollars needed to complete a $400 million campus’s infrastructure plan that when completed will provide teachers and students the resources they need.  Lastly, Governor Brown has directed more than $200 million to CA’s community college system on an annual basis and L.A. will possibly receive up to $15 million of that per year for workforce development programs.

Even with all of these resources, thousands of students still lack sustainable housing and food supplies and the money to buy the two most important items for any technical trade education – the books to learn and the tools to learn and ultimately obtain a job.

Cal State Dominguez Hills (70 percent of the students are women) has also begun a multi-million dollar capital campaign to build a new Science & Innovation building that will be a modern instructional facility, providing state of the art science labs and classrooms supporting innovations in science and math education and faculty research. Cal State LA just broke ground on the Rongxiang Xu Bioscience Innovation Center, which will house the LA BioSpace incubator and serve as a hub for entrepreneurship and job creation on Los Angeles’ Eastside. All of these initiatives will provide career pathways for tens of thousands of Angelenos in some of L.A.’s growing industries – Health Care and Applied Sciences: Physicians, Nurses, Biotechnology, Bio-manufacturing, chemist, physicist, biologist, chemical technician, to name a few.

The resurgence of L.A.’s economy is a good sign that things are heading in the right direction. Now it is incumbent upon those of us with the resources and knowledge to remain committed to finding and advancing innovative solutions that will provide every Angeleno an opportunity to participate in L.A.’s growing success.

 

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