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Resurrecting the city of angels.


Out of the spontaneous combustion that black Los Angeles refers to as "The Rebellion" has come a grand plan for economic revolution in America's most watched urban center. Mayor Thomas Bradley has staked the future of Los Angeles on "Rebuild L.A." (now called R.L.A.). The challenge of this partnership between government, corporate America and Los Angeles' multicultural communities cannot focus solely on resurrecting buildings. Nor can it simply return things to the way they were before the riots. The only way to truly "Rebuild L.A.," as well as the rest of the nation's urban centers, is to establish a program of job training, job creation and business development with the long-term support of government, major corporations and residents of the communities involved.

But the concept of teaming up three entities--government, private industry and the community--that have a history of adversarial and parasitic relationships, while the subject of much lip service, during this election year, has never been tested on a significantly large scale. Can this trinity cooperate long enough to resurrect the City of Angels? Or is this just another smoke screen to pacify the poor residents of South Central Los Angeles whose angry response to the Simi Valley verdict in the Rodney G. King beating sparked the riots?

To be successful, the members of this alliance must trust one other. They must believe that the long-term stability and productivity of L.A.'s poor urban neighborhoods are of greater value than their respective short-term political and profit motives. Finally, the triumvirate must be committed to following through quickly and expediently on a consensus agenda of economic aid, job creation and community redevelopment. How well these parties meet these objectives could provide the answers and incentives to rebuild declining urban centers across the nation. Seven months after the death and destruction of the riots, BLACK ENTERPRISE examines the successes, failures and challenges facing this fragile alliance.

A War Against "Business As Usual"

Danny J. Bakewell was prepared to start a war. In the heat of June, the president and CEO of the Brotherhood Crusade/Black United Fund rallied a crowd of angry, unemployed community residents to shut down the construction site at Vermont Avenue and 85th Street. Encircling the work site he and his followers chanted loudly, "If we can't work, nobody works!"

Nobody worked.

This bold confrontation was part of the fallout from five days of civil unrest that rocked the city little more than a month earlier. Nearly $1 billion in damage was caused by the riots that followed the not guilty verdicts for four Los Angeles police officers charged in the videotaped beating of Rodney King. Los Angeles was just beginning to dig out from under the rubble of more than 1,500 buildings that were damaged or destroyed. Rebuilding them promised a renaissance of redevelopment and job creation in the South Central Los Angeles community.

Many local minority contractors eagerly awaited the opportunity to win millions in contracts clearing away the devastation. And thousands of unemployed residents saw this as perhaps their only opportunity to earn a decent wage and learn valuable skills.

But there were no opportunities forthe community at Vermontand 85th. The prime contractor for the site was Kenco Construction, a white-owned firm based in Glendale, a Los Angeles suburb. The Latino workers on the site had been "imported" from a suburban subcontracting firm. That's why Bakewell led the offensive to shut the operation down.

Within days, Superior Salvage, a local black-owned subcontracting firm, replaced the suburban subcontractor. The out-of-town Latino workers were replaced by unskilled community residents. South Central had scored a victory and "sentone hell of a message," scowls Bakewell. "If we are not part of developing this community, then it's not going to get developed."

Bakewell's message captures the community's desire to free itself from the economic, social and political inequities that have come to characterize life in poor urban communities. The uncontrolled expression of that desire resulted in the Los Angeles riots and the accompanying violence in other American cities. The calculated application of that desire was the work-site stoppage campaign that Bakewell has continued since the standoff at 85th Street. Bakewell and others in the community have set out to wage war against "business as usual," and the battle lines have been drawn around the rebuilding of Los Angeles.

On the surface, the level of activity suggests that all systems are go. The Federal Emergency Management Agency (FEMA), the Small Business Administration (SBA) and city government are identifying new sources of economic aid for riot victims and start-up entrepreneurs. Large corporations such as Hughes Aircraft Co. and Nissan Motor Corp., U.S.A. are forwarding proposals for placing jobs and job-training centers in depressed urban communities. Black businesses are running "buy black" campaigns to capitalize on community awareness. And many community organizations, from the Black Business Association of Los Angeles to the Cross Colours/Common Ground Foundation, have sprung to life, doing everything from harnessing the energy of idle gang members to lobbying for a greater share of government and private sector aid.

But even with all the cooperation, the alliance remains tenuously joined. The lack of a timetable has led to a simmering impatience in the community. And the boiling point that could dissolve the fragile alliance does not appear to be far away.

A New Response To Urban Blight

In May, weeks after the rebellion, Mayor Thomas Brad ley launched the "Rebuild L.A." committee to organize the city's recovery efforts. Bradley recruited former Major League Baseball Commissioner Peter V. Ueberroth as R.L.A. chairman, citing his "ability to get money from the private sector and persuade them to face up to their responsibility and look for riot-damaged places where they could build."

Despite the initial lack of input from the community, R.L.A. committed government, corporate America and the Los Angeles community to a partnership that will determine the c ity's future. Charged with identifying government and private industry resources, R.LA. has acted as a broker, matching the needs of the community with government and corporate investments.

The concept is modeled after the efforts to finance the 1984 Summer Olympic Games in Los Angeles, which Ueberroth also led. Corporations bid for Olympic sponsorships and the right to associate their product with the Games. It turned out to be the most profitable Olympics in history, but Los Angeles' black-owned businesses and black neighborhoods did not share in the economic bounty of the '84 Games.

Making the rebuilding of Los Angeles as successful as the 1984 Olympics were profitable is going to take a gold medal performance from the city, the private sector and the three minority groups that make up the South Central community. South Central Los Angeles is a combination of low-income Latino, black and Korean communities. Many of its Latino and Korean residents are first- and second-generation immigrants with little or no education and limited fluency in English. Many blacks in the community also are poorly educated. Inner-city school dropout rates consistently hover between 60% and 80%.

The Korean community has been able to keep its unemployment numbers low by opening "swap-meets" (similar to flea markets), small groceries and liquor stores. Blacks and Latinos have failed to establish such businesses, and the overwhelming lack af education in the community has made it a haven for the unemployed. "Depending on who you listen to, the unemployment rate in South Centralis somewhere between 20% and 40%, which is two to three times higher than for the general population," says the California Commissioner of Corporations Thomas S. Sayles. "If you're talking about young men between 18 and 25, it's even higher than that." Indeed. Los Angeles' deadly gangs, with about 100,000 members, may be the largest "employer" of young black men in that age group. Since May, these often-violent gangs have maintained a truce, one of the few welcome byproducts of the King verdict and the ensuing riots. However, if alternatives to gang activity--namely, job training and gainful employment-are not made available, a lasting truce is doubtful.

Poverty is rampant. The median annual family income for all of Los Angeles is $34,965. Although the median incomes for black ($33,228) and Latino ($33,586) families approach that level, 21% of black families and 23% of Latino families live below the poverty line. And most of those families live in South Central. By contrast, 11% of white families live below the poverty line, and the median family income for whites is $52,936.

These conditions are a large part of what the rebuilding effort hopes to remedy. R.L.A. Chairman Ueberroth and CEO Bernard W. Kinsey supply the one-two punch expected to convince corporate America to invest in South Central. Ueberroth and Kinsey, a former Xerox Corp. executive, seek long-term commitments of no less than $5 million over five years to create 57,000 new jobs by 1997. They also insist that corporations include job training in their offers to assist.

By mid-August, Kinsey, who manages R.LA.'s day-to-day operations, was boasting, "We've already gotten commitments of over $240 million in direct investment by private industry for the South Central area. That's more money than has been invested in South Central in the last 15 years." He says that those commitments will create at least 8,500 jobs. And he is quick to add that the community has sanctioned all committee proposals. Hughes Aircraft's commitment to redirect $15 million in contracts to inner-city vendors, invest $1 million in local minority-owned businesses, deposit $1 million into minority-owned banks and give $1.2 million to edu- cational programs over five years is exemplary of the programs R.LA. wants to put in place. And Vons Cos. Inc.'s plans to create 2,000 new jobs by constructing up to 12 new supermarkets in riot-affected communities also wins high praise. "We're trying to get people to use their own resources in their communities, rather than waiting on someone to come in with some grand plan," Kinsey says. "We're not promoting anything unless the community feels that it's something that they want to do."

If that seems right in line with Danny Bakewell's philosophy, it's no accident. With millions of dollars at stake, all sides want to be certain that new businesses won't be targeted for elimination the way "unwanted" Korean-owned businesses were targeted for looting during the rebellion. During the riots, businesses such as McDonald's restaurants were not destroyed because they offered black youths jobs and were seen as supportive of the black community.

A Bigger Task Than Envisioned

As the rebuilding effort continues, Ueberroth is expected to do some "behind-the-scenes" arm twisting to secure the hundreds of millions of dollars needed for R.L.A. to enjoy even greater success. As the organizer of the much heralded 1984 Summer Olympic Games, he has the corporate ties that make him uniquely suited to get the job done.

Unfortunately, when you compare R.LA.'s goals with the magnitude of the problem, you find a tremendous shorffall: The number of jobs that R.L.A. hopes to replace doesn't keep pace with the speed at which they leave.

Economic conditions are the biggest reason. The slowdown in the nation's economy has forced many corporations to trim their employment rolls, making it less likely that they will expand. Furthermore, California is mired in a recession. The state has a $10.7 billion deficit and because of an impasse over this year's budget, it paid its bills with IOUs from July 1 through September. Several costly earthquakes this year have complicated matters even more.

All this has created an environment where jobs have fled the state in record numbers. The statewide unemployment rate is approaching 9%, well above the national average of 7.3%. Last year alone, the state lost 333,000jobs mostly from the Los Angeles area. Over the last few years, Los Angeles has experienced the largest decline in jobs in the services, manufacturing, retail trade and construction industries. Since reaching its March 1989 employment peak, manufacturing has lost 155,000 jobs. In the service industries, 67,000 jobs have been lost since March 1990. Retail trade has Iost63,000 jobs since January 1990. And construction jobs have fallen off by 42,000 since March 1990. These areas employ sizable numbers of minorities in low-level skilled positions.

With the Economic Development Corp. of Los Angeles (EDC)forecasting the loss of at least another 90,000 jobs in Los Angeles County by the end of this year, R.L.A.'s goal of 57,000 jobs over five years becomes a drop in the bucket. The need for a full-scale economic development policy is clear.

"The city doesn't really have much of an organized program for economic development," says EDC Chief Economist Jack Kyser. "It's only been in the last year that they've started to pay attention to the issue." During the 1980s, Los Angeles tied its fortunes to exploiting the state's ability to attract investment dollars from the booming Pacific Rim countries of Taiwan, Hong Kong, Singapore and Japan. Much of its resources for redevelopment, including more than $100 million in capital improvements, went into getting more international business.

Kinsey says he has to "lower the expectation" of what R.L.A.'s job is so that people do not become disillusioned. Residents expect aid from somewhere, and R.L.A. has become a favorite target of the needy. And when the community can't find R.L.A., it turns to the government.

Since the state's budget deficit forced it to slash millions from the aid it extends to cities, Los Angeles has precious few resources to allocate to rebuilding. Government has been reduced to offering its best short-term measures until the economic tide turns.

To stimulate business development, the Los Angeles City Council expedited the processing of all construction and business permits. This allowed new construction and rebuilding of riot-damaged buildings to proceed in weeks instead of months. The new procedures also will shorten the time it takes to establish a new business. And existing businesses will find expansion easier as well.

The mayor says confidently that "the majority of the people who had businesses in the riot area are going to rebuild." But when? The very policy his city council passed to speed up rebuilding and encourage new small businesses has been circumvented by insurance companies and banks that discouraged business development by redlining minority communities. In fact, hundreds of the businesses burned in the riots couldn't afford to pay or were previously denied insurance protection and now, won't qualify for loans to rebuild. And many of those who do qualify for loans to rebuild may not be willing or able to withstand more debt.

Undaunted, Mayor Bradley also has established a program to address the fair distribution of city construction contracts. About 600 buildings in Los Angeles were gutted by the riots with insurance claims estimated at $750,000. The city's Board of Public Works awarded a $10 million contract to a coalition of five construction firms to oversee the allocation of city contracts to demolish hazardous structures. Four of the five firms are minority-owned and 80% of the contracts the coalition awards will go to minority-owned firms. But even this effort has met with trouble. Black unemployed workers have picketed construction work sites where other minorities have been employed. Latinos and Koreans object and have accused blacks of demanding a share of the work beyond their numbers. Possible violent clashes loom as groups vow to fight for their "fair share."

Like Mayor Bradley, Gov. Pete Wilson's eftorts to help resurrect his state's largest city are limited by severe budget constraints. Wilson has created a cabinet-level committee of nine state agency heads to coordinate eftorts to help the city rebuild. Thomas Sayles, who chairs the state's committee to revitalize L.A., says "redirection of funds" is the state's short-term strategy to help. "We've proposed legislation recommending that $20 million in unallocated funds be redirected to train individuals in the affected areas," he says. "We think ultimately it will create 4,000 to 8,000 jobs." He says the legislation may take several months to approve.

But Ed Avila, administrator of the Community Redevelopment Agency (CRA) of Los Angeles, says, "The [redirected funds] that are being promised to Los Angeles are resources that were going to be there anyway. They're just holding press conferences to be able to say, 'We're going to put this amount in to help rebuild L,A.'"

Avila's agency designates depressed areas throughout the city as "project areas," where tax-revenue increments are used for public improvements or commercial development. He says the CRA is studying whether new project areas will be established as a result of the rebellion. But he makes it clear that even hard-hit areas may not be designated because of lack of resources. "It would be fruit!ess to establish the whole city as a project area when we know we can't possibly come close to dealing with all the issues and problems," Avila says.

Sayles concedes that his committee will have to face harsh criticism such as Avila's. He knows th a this gruntwork--negotiations-will not be appreciated right away. But he points out that in July, his committee won agreements from insurance companies that encourage the use of minority-owned contractors in reconstructing $750,000 in riot-related property claims. Sayles also persuaded the city's major financial institutions to form alliances with minority-owned financial institutions. And he has been involved in securing federal disaster aid as well.

To those who think government isn't doing enough, Sayles says, "This problem took years to create and it's not going to get solved overnight. It demands long-term solutions and those solutions are going to take time to develop."

Placing Hopes On Enterprise Zones

Perhaps the most heralded attempt at a long-term solution is the concept of federal enterprise zones. They offer tax incentives to encourage development in depressed neighborhoods. The zones have enjoyed more than a decade of bipartisan support, and make up the main plank in President George Bush's otherwise invisible policies for minority business development. Bush renewed his push for the zones right after the May rebellion. Since then, legislation containing provisions to establish federal enterprise zones have passed in both the House of Representatives and Senate. At press time, a compromise bill was being drafted.

Individual states have enacted enterprise zones over the years, but few have shown success. Kyser says Los Angeles' enterprise zone hasn't been very effective. "What it has done is move businesses from one pocket of the city to another. It's not bringing in any new businesses from outside the region, which would be ideal," he says.

But Kyser and others believe the enterprise-zone concept can work with enhanced incentives. Rep. Maxine Waters (D-Calif.) advocates innovative changes, such as making all children in the zones eligible for the Head Star program and offering increased job training with stipends for zone residents. Kyser would liketo see a reduced rate of business income tax within the zones. Saylos suggests a "tax holiday" for firms that relocate from out of state. "If enterprise zones are seen as a way of responding to urban problems, and it is inevitable that they are going to be embraced, then we have to define them in new ways," Waters says.

Waters also is fighting to increase the amount of federal disaster aid for Los Angeles. She says President Bush "begrudgingly" signed a $1.1 billion package of SBA loans, FEMA loans and grants and other assistance in June. "The President really does not want to invest any money in inner cities. He really believes it is notthe responsibility of government to do this," Waters says,

The legislation provides $600 million in grants and low-interest loans for victims and businesses damaged during the riots. The SBA has distributed about 16,000 loan applications, but loan money is only trickling into the community. Language barriers, lost or destroyed records and other problems have caused many delays.

Jay Lee of the Association of Korean American Victims of the L.A. Riot complains, "Lots of people have been turned down for SBA and FEMA loans because it's too hard to qualify." Lee's group held several days of protests at City Hall demanding "reparations" for property damaged during the rebellion. "We want reparations and we want to ease all qualifications for federal help," Lee says,

SBA spokesperson Jill Finnie admits that completing SBA loan forms is "somewhat time-consuming." However, she insists that the information is needed, "so that we know that you can pay the loan back."

And on the subject of reparations, the city's response has been blunt: "There is no provision for reparations," Bradley says. "Anybody who makes that kind of demand is simply not living in reality."

Help In "The Hood"

A number of local community groups have initiated projects to help the rebuilding process, In May, Los Angeles' three black-owned financial institutions-- Family Savings Bank, Broadway Federal Savings and Loan Association and Founders National Bank of Los Angeles--launched a campaign to increase deposits at the banks. Within two months, the campaign infused more than $8 million into the three institutions. It is hoped that the increase in capital will allow black banks to finance more businesses in the community.

One business enterprise that might benefit from the newly available financing is the Brotherhood Crusade's proposed "Mom & Pop: Our Community Convenience Store," 'the "More & Pop" concept is modeled after the 7-Eleven franchise chain of stores. The first store, at 92nd Street and Broadway, cost $400,000 to build. Bakewell says the hope is to franchise the stores and use them as the standard to measure others doing business in the black community.

"We're taking the lead in stimulating economic development," he says. "We will use this prototype to demand that others provide our community with quality goods and services, as well as treat us with dignity and respect."

Maxine Ramson Von Phul, president of Winmax Construction Corp., a black-owned contracting firm, has teamed up with industry giant Turner Construction Co. to develop proposals for major rebuilding projects. Winmax will bring in smaller minority-owned subcontractors to work on the projects, with Turner acting as the construction manager if necessary.

Van Phul says the riots have opened a "window of opportunity." But she cautions, "We're going to have to make a move within the next six to 12 months because people tend to go back to sleep and conduct business as usual if you don't hit hard and get them into the fold immediately."

As chairperson of the Black Business Association of Los Angeles (BBA), Von Phul also has organized construction skills training for minority subcontractors in conjunction with the Los Angeles Small Business Office. The BBA also is conducting construction management seminars for minority-owned contracting firms, in conjunction with Turner Construction.

Meanwhile, other area businesses continue to devote resources and cooperate with community-service groups to help the unemployed, including former gang members, to re-enter the mainstream economy. Eurostar, a regional footwear and apparel maker, former pro-football legend Jim Brown's American program and the Dolores Mission, provide training in retail management and give former gang members jobs operating athletic shoe warehouse outlets in inner-city neighborhoods. "We provide the funds, the site, the facilities, the equipment and the product to set up the business," says Ron Kovach, Eurostar general merchandise manager. He says Eurostar's $30,000 investment is repaid gradually, while some proceeds are funneled back into the Amer-l-Can program for scholarships and additional training.

The Maxine Waters Employment Preparation Center's Counseling Assessment Mentoring Placement Services (CAMPS) program helps about 60 youths receive basic education skills and job training. And Solo Joint Inc., the BE 1COs manufacturer of popular Cross Colours apparel, has joined the Common Ground Foundation to develop programs to support teen mothers and keep inner-city kids in school.

Will this initial experiment involving government, corporate America and the community succeed? It's too early to tell. However, the Simi Valley verdict has infused Los Angeles' black community with a sense of purpose that is fast approaching the resolve African-Americans had when they braved water hoses and attack dogs for the right to vote. The urban unrest that followed the verdict has forced the entire nation to wake up to the fact that neglecting the inner city only undermines the security of all Americans. If that resolve and awareness is maintained, then there is hope for the City of Angels--and all of urban America. --Additional reporting by Solomon J. Herbert and Julia A. Wilson.


Many organizations in Los Angeles are establishing pro- grams to boost economic development and to provide edu- cational and social services to inner-city communities. Here is a partial listing:

* R.LA. (formerly "Rebuild LA."), 1000 W. Eighth Place, Los Angeles, CA 90017; 213-489-9675. R.LA. matches resources donated by private industry with business development and community redevelopment projects proposed by community-based organizations. It wants businesses willing to finance job-creation and job-training programs in Los Angeles' inner city. R.LA. has no money for contracts. However, the individual corporations that commit to financing major business-development projects in Los Angeles may have contracts for minority vendors.

* The Brotherhood Crusade/Black United Fund, 2000 E. Slauson Ave., Los Angeles. CA 90011; 213-231-2171. The Brotherhood Crusade is a community organization that provides an array of educational and social services similar to the United Way. As a chapter of the Black United Fund, it provides day care services, feeds the elderly and the homeless, rehabilitates gang members and advances business-development projects in black communities.

* The African-American Entertainment Coalition 128 Broadway, Suite 205, Santa Monica, CA 90401; 310-917-5040. The African-American Entertainment Coalition is raising $500,000 from its membership and other contributors to channel into existing under-funded community-based programs. The coalition of 23 entertainment industry organizations hopes to receive matching $500,000 donations from many of Hollywood's motion picture studios.

* The Black Business Association of Los Angeles, 3683 Crenshaw Blvd., Los Angeles, CA 90016; 213-292-0271. The Black Business Association of Los Angeles is in the forefront of the efforts to help African American-owned companies increase revenues. The organization encourages joint-venture projects with major corporations, and its ties with local government keep it tapped into the pipeline for city contracts.
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Title Annotation:includes partial list of organizations rebuilding Los Angeles; riot-torn South Central Los Angeles, California
Author:Scott, Matthew S.
Publication:Black Enterprise
Date:Nov 1, 1992
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