L.A. Business Team Helps Companies Call City Home

Frustrated by a city bureaucracy that dawdled when he asked for help and ignored him when he complained, Charles Aaron in 1995 was contemplating a move for his North Hollywood company, a mill and lumber business whose lease was up and whose 65 workers were in danger of losing their jobs.

Aaron was considering Burbank, Palmdale and even Mexico, each of which was appealing from a business perspective. But then members of Los Angeles’ Business Team, a persistent group of young enthusiasts working for businessman-Mayor Richard Riordan, intervened.

Tipped that Aaron was thinking about leaving, they convinced him to look at a property in Sun Valley, inside Los Angeles’ limits. They impressed him with economic forecasts and helped him get financing. And when the city bureaucracy ground down again--a city worker told Aaron it would take two to three weeks to turn on his electrical power--they cut through the red tape and had the job completed the next day.

“Without the mayor’s office, we’d be gone and 65 families would be without jobs,” Aaron said. “With their help, we were only closed two to three days, then we were back in business.”

If Riordan is a different type of mayor--a venture capitalist committed to business growth as a moral and economic mission--the city’s business team is his vanguard. Since its inception in 1995, the 20-person team with an annual budget of $1.5 million quietly has become Riordan’s most reliable tool for economic development. Increasingly, it also serves as his most effective political outreach arm--mending fences with some City Council members and acting as a proponent of tax, development and regulatory legislation sought by local businesses.

At the same time, some critics remain skeptical, suggesting that the mayor’s approach to economic recovery is shallow, that the team’s mission is too diffuse and that even a well-meaning business team can barely tweak an economy that is home to 150,000 businesses.

“The mayor is going to capitalize on the recovering economy without having much to do with it,” said J. Eugene Grigsby, director of the Advanced Policy Institute at UCLA. “The mayor’s approach, in general, is the single-company, single-deal approach. It has the assumption that when you add up all those efforts, it makes a difference to the overall economy. I question that.”

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Still, with little public notice, the team has racked up dozens of success stories, helping to save tortilla factories and clothing manufacturers, luring high-tech firms and supermarkets. Its high-profile coups include the DreamWorks studio and Bloomingdale’s department store, but it has acted on behalf of scores of smaller firms as well. Among others, the team helped keep Pacific Electricord and its 600 workers; Capitol Records with its 300 employees; and Southwest Mill and Lumber with its 65.

What’s more, the team has benefited from its expanding contacts. Members have canvassed chambers of commerce and have built networks of sources among bankers, real estate agents and others who hear that a company might be thinking of moving.

Over the past 16 months, the team’s records show that it has worked with 1,335 businesses throughout the city--work that has ranged from intervening with the city bureaucracy on behalf of a company to giving advice on how to fill out tax forms. Many are small firms, employing as few as four or five people; others have thousands of workers.

“I have never met a bunch of younger, brighter people in my life,” Riordan said of the team. “Everywhere I go, people are coming up to me and telling me what a great job the team is doing.”

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In the process, the business team has forged a rare point commonality with many City Council members, uniting the mayor and some of his fiercest critics in joint pursuit of economic growth. Each of the team’s 15 business development representatives are assigned to a council district, meaning that the representatives often work closely with council members and their staffs on projects of mutual interest.

Councilwoman Jackie Goldberg, who rarely utters a positive word about Riordan in public, nevertheless praises the work of his business team representative for her district, Lesa Slaughter. Debbie La Franchi, the team member responsible for the east San Fernando Valley, has impressed business and political leaders there.

The reviews are not all glowing, however. Councilman Mark Ridley-Thomas questions the overall effectiveness of the team, saying turnover and lack of focus on specific target areas have weakened its impact.

“It’s hard to know what the real impact of the business team has been,” he said. “They may have been helpful in certain instances and certain parts of the city, but there’s a disconnect with other areas. A lot more work needs to be done to clarify the mission.”

Steve MacDonald, director of the team, conceded that it has political challenges to overcome, but said he believes the group is on the right track. “I think the relationship with council members is getting better all the time,” he said. “People are realizing that we’re not an agent of the mayor. We’re here for the city.”

And yet, the team’s effect on the overall economic health of the city remains the object of dispute.

Riordan and his supporters say the Los Angeles economy is rebounding largely because City Hall has warmed to local business. Critics contend that what recovery has occurred is the result of national trends and monetary policy and that Riordan’s team, though well-intentioned, merely is nibbling at the margins of a huge, sprawling economy.

Grigsby notes that the national economy has been improving for the past few years, and says Riordan is no more entitled to take credit for local economic progress than for declining crime statistics. Both are national trends, not local ones, he said.

Peter Dreier, a professor of public policy at Occidental College, is similarly skeptical. “Politicians always claim credit when things go well and distance themselves from things that go wrong,” he said.

In fact, while some of the team’s most notable victories, such as luring DreamWorks with taxpayer-subsidized benefits, may bring the city some return, the importance of the jobs involved sometimes is overstated. For instance, it would make little difference for Los Angeles’ unemployment if DreamWorks were located in Burbank; the same 9,000 or so people that it hopes to employ are no more likely to live in Los Angeles just because the company sits inside the city border.

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Finally, some economists and others warn that Riordan’s efforts are so narrowly tailored that they may spur recovery but only a shallow one that enriches some businesses without doing much to alleviate poverty.

“While the region’s economy appears to be headed for a possible growth spurt, many of the county’s poor neighborhoods are in danger of being left out,” according to an exhaustive new analysis of local poverty by professors from Occidental, UCLA and UC Santa Cruz. “This could create a replay of the 1980s when income growth was accompanied by widening divisions of race and class.”

Deputy Mayor Gary Mendoza, who oversees economic development for Riordan, acknowledged that “it is difficult to quantify with absolute precision the work of the business team,” but added that the team’s efforts are part of a larger economic program.

“The team has made an important contribution to the city’s job base,” Mendoza said. “They are the most proactive arm of the city, reaching out to business.”

In part, the business team’s development reflects early dissatisfaction with Riordan’s efforts to do just that, an issue most strikingly reflected in the 1994 decision of Thrifty Drug Stores to relocate from Los Angeles to Oregon. When Thrifty pulled up stakes after 75 years in Los Angeles, Leonard Green, who heads the investment company that controlled Thrifty, blamed Riordan for not doing enough to keep the firm in the city.

“If this is an indication of how he is going to operate in the future,” Green said at the time, “companies in this city will have a problem.”

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Green was not available to comment, but another local businessman affected by the Thrifty move said the fallout from it continues to reverberate.

“We ended up losing a couple hundred thousand dollars in commissions,” said Don Monroe, who heads a Los Angeles-based manufacturers’ representative that sold products to Thrifty. “I had to downsize my company, let people go. What happened to those people? I don’t know.”

Three years later, Monroe remains unhappy with Riordan’s performance in that case. “I was not impressed with the way he handled that situation,” he said.

If Riordan’s role in the Thrifty move drew criticism, his hands-on efforts since the business team’s inception have won him praise.

Take the case of Puroflow, a company that makes filters and that used to be based in Santa Monica. Mike Figoff, president and chief executive of Puroflow, said company officials in the mid-1990s were fed up with Santa Monica and seriously weighing a move to Albuquerque, where officials were courting them with a variety of incentive programs.

“One day, without any prior notice, the phone rang, and the person on the other end said he was Mayor Riordan,” Figoff said. “I said, ‘Right.’ ”

As the mayor spoke--and Figoff became convinced it was not an impostor--his reservations about moving to Los Angeles gradually faded.

By the end of the conversation, Figoff had agreed to consider moving his business into the city.

And after several months of working with the business team and others, he did just that. Because of that, 78 jobs that could have gone to New Mexico instead came to Los Angeles, along with the tax revenue that Puroflow generates.

Riordan, who tends to downplay the significance of titles and political position, nevertheless says he believes his personal intervention sometimes has made an impression.

“Sometimes I underestimate the power of my office,” he said. “I think the title does carry some power. To think that the mayor cares enough to call is something that seems to have had an impact.”

Robin Kramer, the mayor’s chief of staff, agreed.

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“These decisions about whether to relocate, while business decisions, are also human decisions,” she said. “When the chief executive of the city calls and says, ‘You matter, your business matters, your jobs matter,’ that can make a difference.”

Today, checking in with wavering business people is a regular part of Riordan’s routine.

As often as once or twice a week, the business team hands him a stack of companies they have heard about or worked with. Riordan--from his office or the cellular phone in his Ford Explorer--fires off calls and makes his pitch.

Sometimes, a call from the mayor and a promise of help from the team are all it takes. Other times, the task is far more complicated--but the rewards more profound.

Nowhere is that more evident than in the aggressive campaign to talk Capitol Records out of moving back East. Capitol, whose “stack-of-records” building is a Hollywood icon, had grown weary of the decay and crime in its neighborhood. Looking for reasons to stay, Capitol officials contacted the city’s redevelopment agency.

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Discussions stretched out over two to three years, complicated by a change of management at Capitol.

But when the mayor’s staff interceded, it helped narrow the issues and eventually cut a deal: Capitol would invest in its own facility, the city would find money to build a parking garage next to the building, and Capitol would lease spaces in that garage so employees would have a safe place to park.

The city also encouraged Capitol to refurbish its building, and the federal government agreed to kick in money for the parking structure.

The result: 300 mostly high-paying jobs stayed in Los Angeles and a landmark building got a new finish.

The neighborhood may get a Capitol Records store, possibly even a new cafe. And, not incidentally, both Mayor Riordan and Councilwoman Goldberg scored political points.

“That’s good policy,” said Kramer. “And it’s good politics.”