Behind Santa Ana’s Turnabout : Urban Affairs: The city, businesses and developers worked together to revamp a once-decaying downtown and create strong commercial districts in outlying areas.

SANTA ANA —  If Orange County had an inner city, this would be it.

In the county’s second-largest city, the median per-capita income of $11,500 a year is among the lowest in the county, and the crime rate is among the highest. The homeless and hopeless congregate downtown, drawn there by the presence of a major bus terminal, Orange County Jail and the county’s social services offices.

Yet “down and out” is not part of the lexicon of the city’s civic and business leaders.

Through varied programs in the last decade--and especially in the last four years--the city, merchants and developers have worked together to revamp much of Santa Ana’s once-decaying downtown and create strong commercial and industrial districts in outlying areas. More than a dozen high-rise offices and hundreds of thousands of square feet of industrial, retail and commercial space have been opened in Santa Ana just since 1986.

The downtown cleanup and business development campaign began in 1973 with creation of the first of five redevelopment districts. But the effort has reached full stride only in recent years, as the city began reaching out to sell itself as a business location while working to persuade companies already here to stay.

Since 1985, Rob Richardson, manager of the city’s economic development division, and his crew have personally contacted nearly 500 businesses in the city, telling them that Santa Ana appreciates them and wants to do what it can to make them happy.

“I think that’s what distinguishes us from most other communities,” he said. “Our primary activity is to focus on businesses that already are here. We have a good business base, and we want to maintain it and then add to it.”

The city has done a creditable job adding to that base. In the past three years, several dozen large commercial and industrial projects, including the $300-million Hutton Centre and the $400-million MainPlace/Santa Ana mall, have been completed. And nearly a dozen major projects with a total value well in excess of $2 billion are on the drawing boards, Richardson said.

In the spirit of wooing new recruits, Santa Ana in recent weeks has placed full-page ads in major magazines, including Business Week. The ads show a panel of elevator buttons under a headline touting Santa Ana as “a unique business community that has all the hot buttons needed to whisk you to the top.”

Through a combination of programs offered by its redevelopment and economic development agencies, Santa Ana does push a lot of buttons for business executives.

“We love it there,” said Robert Young, president of McDonnell Douglas Realty Co. in Newport Beach and one of the key players in the company’s 1985 purchase of a 50-acre commercial-industrial site.

On 18 acres of the parcel, now called Douglas Center, the company built a 360,000-square-foot headquarters for McDonnell Douglas Computer Systems Co. The project brought 2,000 jobs to the city. McDonnell Douglas Realty plans to develop the remaining 32 acres as McDonnell Center, a mixed-use commercial and industrial park.

“Santa Ana has the most cooperative, most participating economic development people we have ever worked with, anywhere in Southern California,” Young said. “They keep their word, while in a lot of cities the people just give lip service to redevelopment.”

In McDonnell Douglas’ case, city officials have steered prospective tenants to McDonnell Center; helped persuade the previous owner to sell the land in the first place, and helped shepherd plans and permit applications for the project through the city’s bureaucracy. In other cases, cooperation includes arranging for low-interest development loans.

And a business does not have to be big to interest the city’s economic development people.

Among other programs, Santa Ana maintains the county’s only small-business incubator, a facility that helps underwrite rent and other costs for up to two years while young enterprises build their foundations.

Even when the city is not pitching in with money or free services, its attitude toward business development seems to pay off. Take the case of POD/Sasaki Inc.

Ronald Izumita, a principal partner of POD, sounds like a paid pitchman for Santa Ana when asked why his landscape architecture firm, looking to expand in 1986, chose a turn-of-the-century downtown building instead of a new development in Newport Beach.

“A lot of it had to do with the city wanting us,” he said. “How often do you have the city coming down and asking you to stay? I think that’s neat.”

Izumita said he and his firm’s 60 local workers love working in downtown: “We wanted to stay in a place that said ‘city.’ Our offices in San Francisco are in the old

city, our offices in Los Angeles are in the city. We are a design firm, and we try to be part of the renewal of urban America.

“That’s what we like about Santa Ana. It helps to know Spanish to survive on the streets around here, but it is alive and it is coming back. The streets are walkable, and it is just a great place for a designer to get ideas.”

Besides location, local color and an aggressively willing economic development staff, Santa Ana offers financial inducements to businesses, Richardson said.

Among them are Small Business Administration loan programs for guaranteed development, capital equipment and working capital; city-sponsored taxable bond issues to raise money for new construction, and expansion programs and a direct city loan program funded from redevelopment agency income. In all, Richardson said, the city has processed about $17 million in such loans.

The city has also sponsored about $100 million in tax-free bond issues for various businesses in the last five years under the federal industrial development bond program. But that program is being phased out by the federal government.

Finally, businesses in the city’s redevelopment areas can get partial reimbursement for improvements to their building facades, and the city will remove old signs and storefront awnings at no cost to the business owner.

So far, the programs have been successful. With just less than 11% of the county’s population, Santa Ana is home to 16% of all of its businesses--about 13,000 of them, up from 12,000 just two years ago.

In terms of development of new business facilities, 1986-87 was Santa Ana’s peak period. More than 1.3 million square feet of office and industrial space was leased or sold in the city’s five redevelopment areas during those two years; more than $434.3 million in new buildings and building rehabilitation work was begun.

The list of companies that have located major regional operations in Santa Ana just since 1986 reads like a primer on corporate America: Xerox, McDonnell Douglas, Unisys, Wang Laboratories, A.C. Nielsen Co., ITT Cannon, and Aetna Life & Casualty.

Richardson of the city’s economic development division, city redevelopment manager Robert Hoffman and others credit Santa Ana’s progress to the city councils that, since 1972, have recognized the importance of maintaining and improving the business base. In addition to providing jobs, a solid business base is needed to help pay for city services and programs.

That foundation had started to erode in the 1960s, as development moved south. By the mid-1970s, Hoffman said, that loss of wealth contributed to soaring crime and poverty rates and a city infrastructure that was aged and breaking down.

The city’s goal for the last 16 years has been to stabilize its economic base and “seal the revenue leak to other cities,” Richardson said.

“We think we have done that now,” Hoffman said, “but we can’t retire just yet. It is still a precarious balance.”

More than a dozen major developments in the planning pipeline should help tip the scales in Santa Ana’s favor.

Among them are a proposed $400-million redevelopment of the commercial area around Bowers Museum, near the intersection of 17th and Main streets; commercial and industrial development of the 75-acre Santa Fe Realty Co. property on Grand Avenue between Edinger and Warner avenues, and, possibly, the much-ballyhooed $70-million, 20,000-seat Santa Ana sports arena.

SANTA ANA’S BUSINESS DEVELOPMENT PROGRAM Small Business Administration Loans, Fiscal 1984 to present: 27 loans made. Total loan value $8.1 million. Value of all projects, $17.6 million. Commercial Rehabilitation Loans Santa Ana Economic Development Corp. 27 loans. Total loan value, $7.6 million. 245,068 square feet rehabilitated. City of Santa Ana Direct Loan Program. 14 loans. Total loan value $821,543. Value of all projects, $1.5 million. 123,439 square feet rehabilitated. Facade Improvement Rebates 98 rebates. $557,548 refunded. Free Sign Removal 95 signs removed at no cost to business owners. MAJOR EXPANSIONS & RELOCATIONS

Company Square Footage Year Orange County Register 173,000 1986 CALTRANS 127,000 1988 Aetna Life Insurance 130,000 1986 Unisys 120,000 1987 County of Orange 100,000 1988 Xerox Corp. 100,000 1986 ITT Cannon 65,686 1988 Centennial Group 62,505 1988 Nordstrom 60,000 1986 United California Savings 45,000 1987

Source: City of Santa Ana