REPORT URGES AID FOR VALLEY CITY, STATE KEYS TO GROWTH.

Byline: Gregory J. Wilcox Staff Writer

UNIVERSAL CITY - Government officials need to reverse their anti- business attitude for the San Fernando Valley to grow its $30 billion annual payroll and remain an economic force in the region, according to an economic development report released Wednesday.

Much of the blame for the anti-business stance rests with the state, concluded the Mulholland Institute Report prepared for the Economic Alliance of the San Fernando Valley. In the past, much of the worst damage to the Valley economy has been self-inflicted by local leadership at City Hall over issues such as business taxes, the report said.

``The stories I heard about city government were pretty horrific,'' said Joel Kotkin, author of the report and a senior fellow at the New America Foundation.

Called ``Prosperity Tomorrow,'' the report is part of the Alliance's long-range vision for continued Valley prosperity.

It said the Valley continues to display many of the key components of a region of opportunity and is a place where people of diverse backgrounds can come, find work, buy a home and start a business.

``Downtown is not very important relative to the region,'' Kotkin said. ``It's nice, it's got some symbolism but it's not the heart of the Southern California economy. The heart is nowhere, but many places.''

With 661,000 private sector jobs and an additional 120,000 people self- employed, the Valley is one of those places. But it needs nurturing.

The authors based their conclusions on interviews with executives at large and small companies, community leaders and business and community groups.

Sandor ``Sandy'' Samuels, senior managing director and chief legal officer at Calabasas-based Countrywide Financial Corp., said some state regulations make it difficult to expand within California. The company has increased its presence out of state.

``We love it here. California makes it hard ... while Texas can't do enough for us. Here sometimes we feel like we are seen as the enemy,'' he is quoted in the report.

This kind of trend cannot continue, the report said, especially since business and financial services is one of the Valley's three top employment sectors.

``The loss of potentially hundreds of high-paying positions in business services is a body blow to the Valley economy,'' the report said.

It also notes that the most expensive city in the county in which to do business is Los Angeles, according to the 2004 ``Cost of Doing Business Survey.''

Vince Soloitto, spokesman for Gov. Arnold Schwarzenegger, said the administration has already improved the business climate.

``It's certainly true that California has deserved its reputation as having a hostile business climate. It's something the governor recognized and ran on in his campaign,'' Soloitto said.

Since taking office, the governor has helped reform workers' compensation insurance and workplace litigation regulations.

Some businesses have seen rates fall by 10 percent to 20 percent and more reductions are expected as costs continue to come down, he said.

The governor has also initiated a nationwide campaign to attract business to California, Soloitto said. And on Wednesday, Schwarzenegger arrived in Japan to pitch the state as a good place to do business.

Yusef Robb, spokesman for Mayor James Hahn, agreed the city has had a bad reputation and the administration is trying to burnish it.

``Mayor Hahn brought about a sea change to the culture at City Hall when it comes to business. Customer service in city departments is now Job One,'' he said.

The Alliance report suggested that parts of the Northeast Valley be turned into urban clusters of industrial, residential and retail uses.

Hahn also implemented an Industrial Development Policy Initiative to identify prime areas for development and the first phase has ended.

Institute fellow Daniel Blake, director of the San Fernando Valley Economic Research Center at California State University, Northridge, said the Valley, with 1.8 million residents, is a key component to the regional economy.

He expects the Valley economy to grow by 1.7 percent, between 10,000 and 12,000 jobs during the next two years.

``We have a dynamic economy that rises above the trends of the surrounding area.''

Gregory J. Wilcox, [phone]

greg.wilcox(at)dailynews.com