Keys to success in the cities.

California is grappling with perhaps its most severe economic drought in more than 50 years.

Indeed, despite optimism for a quick recovery, the current market dry spell is lingering as the state continues to stumble along in the dusty wake left by the hyperactive, uncontrolled economic climate of the late '80s.

Governor Pete Wilson put it bluntly and succinctly in his recent cover letter for the Economic Report of the Governor, 1992: "California faces the worst economic and fiscal situation since the Great Depression of the 1930s."

In this letter, Wilson reports that in the past two years California has lost approximately 690,000 jobs and retail sales for 1991 were down 5.5 percent.

Though the economic picture may appear bleak, there is hope if state and local governments work together to make California competitive again and create a business climate that encourages business growth.

Still, these efforts to make state regulations more "user friendly" to business are not going to produce results soon enough for cities throughout the state, especially those in Southern California.

Faced with a recessionary economy, escalating land prices, high living costs and an increase in corporate relocation competition from out-of-state areas, many area cities are scrambling to keep jobs and revenues from evaporating as businesses look elsewhere for greener pastures.

The good news, however, is that forward-thinking cities can compete, and do so effectively, in the corporate relocation and expansion arena.

Through creative and aggressive business support strategies, communities can offer existing and prospective companies numerous economic opportunities that make locating in Southern California a viable business solution and valuable long-term investment.

The challenge, then, is determining effective approaches that are within the control of local governments. What follows are a number of key strategies which Southland cities can take to help make themselves more competitive for businesses seeking relocation and expansion opportunities:

* Understanding California's Market Dynamics. Perhaps an obvious point, but one most certainly worth emphasizing. Economic development professionals must recognize that California's economic make-up limits a city's ability to compete against out-of-state rivals.

The reasons are many. The state's high land costs, workers compensation laws, higher wages, developer fees and exactions, property taxes, extensive Air Quality Management District (AQMD) mandates, transportation problems and other elements all combine to cut substantial dollars from a business' bottom line.

Understanding why an area is at a competitive disadvantage from the outset of business attraction and retention efforts often helps in developing effective approaches for offsetting them.

* Know The Competition. More than ever, city development officials must know where and who the competition is. This is doubly true for Southland communities that are forced to compete with the likes of Arizona, Nevada, Texas, Colorado, Oregon and other Western states, all of which have the advantage of offering lower land costs, fewer government regulations and other enticing incentives.

Thoroughly profiling the competition not only allows cities to learn what areas they are competing with, but it also helps determine if they can compete at all.

For instance, Southland communities in Orange County or Los Angeles County simply cannot beat southern Nevada on the basis of land costs, property taxes and wages.

This is a good to know. If a city can't compete, then it needs to be aware of that and then determine what, if anything, it can do to tip the scales back in its favor.

In a recent example, the City of Orange was able to keep major employer TRW from relocating out of state by offering rental subsidies, incentives that made staying in the city financially feasible for the company.

These incentives, coupled with the fact that the work force was such that it would be difficult to replace or relocate, tipped the scales enough to make a difference.

The key to this successful retention effort was that Orange understood its competition's advantages, and then responded accordingly.

* Identify Target Businesses. Another seemingly straightforward point, but one that's often overlooked. Cities need to develop economic development strategies to clearly identify companies they would like to retain and attract, and then determine which of those businesses they can realistically pursue.

There are many questions to ask. Does a city want to attract retail, manufacturing, high-rise office or light industrial tenants? Are there existing facilities or available land for these users? Is it economically feasible? Does business want to locate here at all?

Throughout this process, cities are wise to work with utility companies, both to identify compatible industries and to gain their support in business attraction and retention efforts.

For instance, in the City of Anaheim, three distinct areas have been targeted: one for high-tech and manufacturing companies, another for high-rise and corporate office tenants, and still another for civic and retail uses, all based on each center's unique, existing business environment and location.

To make these targeted areas more attractive, Anaheim's Community Development Department has formed a partnership with the City's own Electric and Water Utility, which can provide off-peak power and other incentives that help make each center more competitive for business.

In another example, the City of Brea has earmarked R&D, pharmaceutical and related high-tech companies for relocation opportunities, while the City of West Covina is concentrating on retail centers, such as the West Covina Fashion Plaza Mall and the West Covina Parkway Plaza community shopping center, as well as other businesses willing to expand or relocate within its redevelopment area.

In all these cases, each city has identified compatible business uses, and made efforts to attract and retain them.

* Take Advantage Of Unique Characteristics. Almost every city in Southern California has several unique characteristics that make it attractive to business, and these should be highlighted.

Whether it's location, freeway access, affordable housing stock, lifestyle amenities or a mix of these, these features are vital to companies making site decisions and should be promoted vigorously. And of course, let's not forget the advantage of Southern California's comfortable climate.

In certain instances, cities may even be able to offer special advantages, benefits or amenities. Long Beach is near a major harbor, Los Angeles is home to an international transportation hub and Anaheim has Disneyland and a Convention Center, as well as its own municipal public utilities.

* Be A Business Partner. For Southern California cities, this is a must. With the economy still slumping, businesses are looking to trim operational costs and tighten their collective corporate belts. In many instances, that means looking at lower-cost locational alternatives outside the state.

Southland cities, however, can take aggressive action to show companies just how important and desirable they are. By presenting themselves as proactive business partners, smart communities can often attract the attention of companies bent on leaving for economic reasons.

Sometimes, just letting companies know that a city is pro-business and willing to work with them to solve their overhead and other cost problems is enough to make the difference.

* Offer Pro-Business Support Programs. This is perhaps the most important of any strategy Southern California cities can employ.

Because out-of-state competition is so stiff, Southland communities must come up with ways to offset the lower costs of doing business outside the region.

The bottom line here is money. Businesses are looking for ways to both save and earn more of it, and in California it's becoming increasingly difficult to do. Cities, therefore, should turn to creative use of incentives programs to make themselves more attractive to companies.

Anaheim, for example, has successfully used a mix of incentives including redevelopment agency loans, utilities rebates, subsidies, job training programs, energy efficiency strategies and more to keep or attract three major employers within the past six months.

Taken together, these companies -- Micro Technology, Inc., BACE Plastics Group, Inc., and Allen-Bradley -- combine to employ more than 700 people and generate in excess of $250 million in annual sales.

Clearly, offering pro-business support programs made a significant difference in these companies' relocation decisions.

* Employ A "Can Do" Spirit. Image is especially important in these trying economic times, so cities are wise to demonstrate a "can do" spirit when it comes to corporate relocation and expansion.

Be creative, energetic, positive and, above all, flexible when working with existing and prospective companies. Because when all is said and done, Southern California is still one of the best places to live, if for nothing else than for the area's exceptional location and unparalleled lifestyle.

The keys to successful corporate retention and expansion, then, are developing and implementing aggressive, pro-business support strategies.

Through these efforts, cities can help reinvigorate the Southland's wilted economy and help halt the exodus of businesses from the area.

Elisa Stipkovich is director of Community Development for the City of Anaheim.