FUTURE IS HERE VALLEY HOLDS AREA'S CORPORATE JEWELS; THREE CORPORATIONS ON LAST YEAR'S FORTUNE 500 LIST MAKE THEIR HOME IN THE VALLEY.

Byline: Sam Staley

LOCAL ownership of the Los Angeles Times will soon become a thing of the past. Let the hand-wringing begin.

The angst of losing yet another corporate headquarters is already generating concern about the future of Los Angeles. Coming on the heels of the opening of the Staples Center, the ongoing redevelopment on Hollywood Boulevard, and under the watch of the business-friendly leadership of Mayor Richard Riordan, many may wonder how the traditional city center can possibly be restored as the region's economic and political powerhouse. If Atlantic Richfield sells out to British Petroleum, the future of downtown Los Angeles will be sealed.

The departure of high profile corporate headquarters, however, is more symbolic than real. The Tribune Co.'s purchase is more reflective of the changing face of the newspaper industry than the economic future of L.A.'s traditional city center.

Political pundits and downtown leadership should be more worried about the lack of new companies capable of filling these corporate shoes. In the globally competitive world of the 21st century, city economies are not supported by historically powerful companies; they are sustained and nurtured by innovative, growing companies that create new wealth, jobs, and investment.

The future of Los Angeles, in this respect, may not be in the downtown at all. Indeed, it may turn out that Los Angeles has a trump card: the San Fernando Valley.

The Valley is one of several post-World War II suburbs that have evolved into cities in their own right. After the housing boom of the 1950s and 1960s, the Valley and other suburbs built up their commercial and industrial bases. Often considered an appendage to the ``real'' Los Angeles, the Valley's population quintupled between 1944 and 1960 as a burgeoning science-based economy fed rapid economic growth and development.

Now, the San Fernando Valley is the densest center of motion picture employment in the nation, with roughly half the total for the Los Angeles area, according to the San Fernando Valley Economic Research Center at California State University, Northridge. Three corporations on last year's Fortune 500 list make their home in the Valley. This economic base positions it well to take advantage of the dynamic technology-driven, information-based economy.

Often considered the stepchildren of the traditional city center, older suburban areas such as the San Fernando and San Gabriel valleys have emerged as economic powerhouses that fall somewhere in between dense traditional city centers and predominantly bedroom suburban communities.

Pepperdine University's Joel Kotkin refers to them as ``midopolitan'' communities to reflect their evolution from bedroom enclaves to regional powerhouses, fully capable of competing globally in the high-tech economy of the digital age.

To be sure, these areas are facing their own challenges. The San Fernando Valley has gone from roughly 90 percent Caucasian in the 1960s to 44 percent minority in the 1990s. Latinos represent nearly one-third of the Valley's population. Integrating this kind of diversity represents a challenge for all communities.

But these challenges also create opportunities. Diversity has helped bring new economic vitality to many older suburbs. In the San Gabriel Valley, Asian-American entrepreneurs have helped start over 1,200 computer firms, employing more than 5,000 people with sales of over $3 billion.

Of course, one needs to look no farther than downtown L.A. to see the potential of immigrant and minority entrepreneurship. Toytown is one of the nation's redevelopment success stories, its growth largely attributed to benign neglect among the city's leaders that allowed a thriving business district to develop spontaneously from the neighborhood level.

And Southern California is not alone. Take a gander up the coast to the San Francisco Bay Area. San Francisco County, the symbolic center of the Bay Area, is home to just 10 percent of the region's 500 largest corporate headquarters. Santa Clara County, the fabled home of Silicon Valley, claims 49 percent.

By the 1990s, notes Kotkin, suburban areas of metropolitan areas fed off suburban sprawl, boasting low office vacancy rates, increasing property values, and booming job growth. By the 1980s, observes San Francisco economist Lynn Sedway, the city of San Francisco had become a ``subsidiary'' of Silicon Valley as the real growth occurred in San Jose and other peripheral areas.

More presciently, Silicon Valley has benefited from its ethnic diversity: Asians started roughly 27 percent of Silicon Valley's new enterprises between 1991 and 1996.

So, how is this story relevant to the Los Angeles Times' ownership exit? Quite simply, the competitive advantage has shifted to suburban areas such as the San Gabriel and San Fernando valleys as well as Orange County. The future of a traditional city center will depend on its ability to create new wealth and tap into the entrepreneurial resources of its citizens, not in holding on to symbols of its corporate past.

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Photo: (color) no caption (Aerial view of Warner Center in the Valley)

Dean Musgrove/Staff Photographer