VALLEY BUSINESS GROWING STRONG.

Byline: Brent Hopkins Staff Writer

Nearly half of San Fernando Valley businesses grew this year despite the recession and more than half plan to make capital investments in the next three years, according to a survey released Thursday.

The survey presented at the Economic Alliance of the San Fernando Valley's Info Summit 2002 portrayed a generally optimistic outlook although concerns remain high that Los Angeles' high business taxes are chasing away companies to nearby suburbs and thwarting economic development.

The summit brought together economists, academics and industry voices to the Sportsmen's Lodge discuss the state of the local economy. The general prognosis is that while the economy remains relatively stable, much work remains by city leaders to ensure that this continues.

Though the secession debate was raised by several participants and audience members, alliance President Bruce Ackerman stressed cooperation with existing government.

``We're not here to bash Los Angeles,'' he said. ``It's like slapping yourself silly in front of a mirror. We have problems - we know that, it's not earth-shattering. But we just need to work together on these issues.''

This sentiment was shared by Jack Kyser, chief economist for the Los Angeles County Economic Development Corp., who said the Valley needs to boost its name recognition. While West Los Angeles and Hollywood receive the majority of the nation's attention for their connection to the moneyed elite of Hollywood, Kyser said the Valley garners only attention for its politics and adult entertainment.

``Why do people know the San Fernando Valley?'' he said. ``Secession and the industry that dares not speak its name.''

If the Valley were to polish its image and play up its strengths as a major center of manufacturing, mainstream entertainment and technology, Kyser said, it would be more successful in attracting commerce.

Another concern was business tax reform, which participants cited as crucial to making Los Angeles competitive with neighboring municipalities and a frequent topic among local industry leaders.

Consultant Larry Kosmont, president and chief executive officer of Kosmont Cos., pointed to the disparity between local taxes in the city's neighbors and Los Angeles proper.

By his research, an HMO requiring 350,000 square feet of office space would pay no local business tax in Santa Clarita. Compared with the $3.8 million the same firm would pay were it located in Universal City, the decision to flee Los Angeles for its less pricey surroundings was elementary, Kosmont said.

``This is not rocket science,'' he said. ``If this City Council can't find a way to reform this, they'll drive themselves out of business ... We're running out of time for a meaningful reform.''

Kosmont Cos.' recommendation, one of several proposals floated in recent weeks, entails more stringent collection, but lowered taxes. And according to Ralph Rossum, a professor and director of the Rose Institute at Claremont McKenna College, lower taxes are of paramount importance to local firms.

``For companies that are leaving or considering expansion, the business tax really does weigh heavy on their mind,'' Rossum said.

The Rose Institute polled 586 local firms between Nov. 28, 2001, and March 1, 2002, by telephone and written questionaries. The survey found that 43 percent of businesses experienced growth, mainly companies in the manufacturing and service sector, and 54 percent are planning to invest in equipment or capital improvements in the next three years.

``That's an impressive number, given the economy and Sept. 11,'' he said.

If the region wants to continue to grow, Kyser said, it must focus on continuing to reinvent itself. Just as workers adjusted when aerospace dried up in the 1990s, they must continue to be nimble in adapting their talents and seeking new opportunities.

``People don't give us credit - (they think) we're airheads who make movies,'' the economist said in his wry closing remarks. ``But we really are quite resourceful about creating new industries and piecing things together from separate businesses.''

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BUSINESS EXPANSION

SOURCE: The Rose Institute, Claremont McKenna College

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