Legislative economic action plan

The City of Los Angeles, located on the Pacific Rim, is home to more than four million residents and ethnic communities from all over the globe. The City boasts an outstanding climate, proximity to beach and mountain recreation, and is the entertainment capital of the world. With the largest port complex in the United States by volume, one of the world’s busiest international airports, and a large manufacturing base, the City’s economy is large and diverse.


In spite of all of these compelling reasons to do business in Los Angeles, the City is perceived by many in the business community to be business-unfriendly, especially when compared to neighboring jurisdictions. This negative reputation is attributed to numerous factors, including but not limited to complicated entitlement processes, complex tax codes and high tax rates, and lack of incentives to nurture existing businesses and attract new ones.

The call to remedy this perception is not a new one; however, little has been done to implement past recommendations such as the following:

• In 1995 the Dan Garcia Report entitled “Permit Streamlining and Bureaucratic Reform in the City of Los Angeles: Report and Recommendations,” which was submitted to then Mayor Riordan, offered recommendations on streamlining the development process to remove uncertainty and complexity from the system.

• In 1999 the Business Tax Advisory Committee (BTAC), was formed to explore a tax rate reduction, remove complexity from the tax code and increase compliance. Compliance has increased, the code has been simplified, and a 15% reduction in the business tax has been successfully implemented, saving taxpayers approximately $64 million while revenue increased by $141 million over a five-year year period. However, the City of Los Angeles still has a high tax burden compared with neighboring municipalities.

• Formed by Councilmember Bernard Parks and chaired by Brendan Huffman, Past President and CEO of the Valley Industry and Commerce Association (VICA), the Business Retention & Attraction Task Force brought together industry experts and business community advocates to propose recommendations to the City Council. In their 2007 report, the Task Force:

1. supported the need for further tax simplification and reduction measures;
2. advocated for the improved predictability in housing and development policies;
3. called for the City’s investment in the Port of Los Angeles and Los Angeles International Airport;
4. and supported the creation of a Los Angeles Entertainment Technology Development Zone.

• Concurrent with the Business Retention & Attraction Task Force’s efforts, Mayor Antonio Villaraigosa’s Los Angeles Economy & Jobs Committee, comprised of business, labor, government and academic leaders in the field, was charged with bringing back to the City recommendations for job growth and a stronger economy. This was laid out in a report to the Mayor entitled “Building a World-Class City for the 21st Century.” The report offers 100 recommendations for the City, including new ideas as well as many that echo recommendations from past efforts.

The carefully assessed and specifically identified objectives and recommendations put forth by these panels and committees underscore that the City can and should do more to create a legacy of business advocacy to strengthen our place in the world economy. In response to the numerous calls from the community, and in light of the already weakening economy, a standing committee of the Los Angeles City Council was created to begin the process of actually implementing many of the aforementioned recommendations. That committee, which I am proud to Chair, is the Jobs, Business Growth, and Tax Reform Committee.

Together with my Committee colleagues, Councilmember Wendy Greuel, the leader of our last round of business tax reforms, and Councilmember Herb Wesson, Jr. a champion for economic redevelopment and urban renewal, we hosted regional meetings to get input from business owners and advocacy groups, labor representatives and residents. We wanted to hear what their most pressing concerns and challenges are, and what steps they feel we as a City could take to be more business-friendly.

The Los Angeles business leaders who participated in our meetings included Bruce Ackerman, President and CEO of the Economic Alliance of the San Fernando Valley; Bill Allen, President and CEO of the Los Angeles Economic Development Corporation (LAEDC); Leron Gubler, President and CEO of the Hollywood Chamber of Commerce; Brendan Huffman, Past President of the Valley Industry and Commerce Association (VICA); Jack Kyser, Chief Economist of LAEDC; Carol Schatz, President and CEO of the Central City Association of Los Angeles (CCA); and Gary Toebben, President and CEO of the Los Angeles Area Chamber, and many others.

Therefore, L.A. Legislative Economic Action Plan (LA LEAP) reflects the input of all the participants at the Committee meetings, responds to the call from the community for action, and is designed to move those recommendations through the implementation process.



The Problem

Los Angeles, one of the world’s great cities, is at a crossroads. We are in the midst of the worst economic crisis we have seen in our lifetime. During the last two decades of economic prosperity, Los Angeles’s population has grown while we have lost jobs, particularly middle-income jobs. Since 1980 the City’s population has grown by 1 million residents, yet the City has lost about 50,000 jobs.

Home prices have plummeted. Families are losing their homes to foreclosure. Local unemployment has skyrocketed to over 9%. Prices for food, gas and healthcare are at an all-time high. City schools have unacceptably high drop-out rates and our children who do graduate are unprepared to enter the workforce. The state faces a multi-billion-dollar budget deficit. The City coffers are short hundreds of millions of dollars and layoffs are likely. Crucial City services are at risk. This crisis threatens all of Los Angeles.

In order to survive this dire economic situation, the City of Los Angeles must make economic development a priority. We must act now to support the business community’s call to action and enact this package of legislation to implement the changes they have long advocated.

Over the years the City has convened tens of thousands of hours of expert testimony in special committees seeking advice on economic development and spent millions of dollars on reports from leading think tanks and academics. Yet much of this advice goes unheeded while the reports collect dust on the shelves. The time for discussion is over. We have the plan. The time for action is at hand.



The Mission

Take action now to enact powerful legislation that will remove obstacles to businesses and help our local economy thrive amidst the current economic crisis. Introduce LA LEAP to immediately cut red tape, reduce taxes, invest in boosting the City’s economic engines, attract cutting-edge businesses that bring high-paying jobs, and bring a renewed focus on vocational training.



L.A.’s Economic Engines

Although making Los Angeles one of the world’s most business friendly cities will be a major challenge, we have vast resources, assets and talents that make this goal attainable.

Los Angeles is one of the few cities that has a diversified economy with a large and talented labor pool, but also is a leader in international trade and commerce. Over 40% of the nation’s cargo as well as millions of travelers move through its port and airports.

The City is one of the world’s cultural capitals, with film, television, performing arts, and tourism accounting for over 25 million visitors each year, bringing billions of dollars into the local economy and much-needed tax revenue.

Los Angeles is also home to several top-notch universities that generate a constant stream of educated, skilled workers. They also employ tens of thousands of people in high-quality local jobs.

While powerful in their own right, these economic engines need focused investment and government support to reach their maximum growth potential. We cannot stand still, as has too often been the case, when it comes to investing in critical infrastructure and growing our economy. In order to get the most out of these economic engines, we need to take serious action to prioritize economic development and lower the cost of doing business.



The Plan

It is time to think outside of the box and acknowledge that the City of Los Angeles competes for jobs and prosperity with other cities and states, in the U.S. and across the globe. We are one of the world’s great cities, the second largest city in the United States, and we must do more to position ourselves as a competitor in the global marketplace.

But how can we compete globally when we are disadvantaged locally as a result of our tax rates? The biggest concern for businesses in Los Angeles is the City’s business tax structure. It is time to start the next level of business tax reform that has been long discussed. We must move forward with further reduction or eventual elimination of the gross receipts tax in Los Angeles.

We should remove restrictions that prevent the Mayor and Council from attracting and retaining business to Los Angeles. We need the same flexibility that other cities have to be able to negotiate directly with companies. Cities that have that flexibility often win the competition for economic investment and jobs. That is why I propose changing the City Charter to authorize the Council and Mayor to negotiate with companies in order to level the playing field.



The Council should work to reorganize the City’s department processes and remove unnecessary delay, time and uncertainty from the system. It should not take six or seven years to get approval for a development project. Los Angeles needs a single City Department that has a clear mandate to set a growth goal for the City, and is empowered to ensure that the goal is met.

We are losing international travelers to other regional airports. It is crucial that our airports are recognized as first-class facilities in the eyes of domestic and international travelers. The Port of Los Angeles is a major growth engine, and we must invest in infrastructure that will provide an environmentally sound way to handle the Port’s growth.

We need a workforce that has the skills that are demanded by a competitive international economy. The school system has failed our children. Vocational programs have been all but eliminated from the curriculum. We will ask our businesses and our unions to partner with our schools and colleges to ensure a trained workforce. We should bring in more internships, expand apprenticeship programs and help ensure that the workforce of Los Angeles is prepared with the skills necessary to find quality employment opportunities, and meet the needs of our local economy.


These principles, concepts, and ideas have been developed and vetted by the business community and by the Council’s Committees and are overdue to be put into action. Given the dire economic conditions, we should act immediately on these goals and begin remaking Los Angeles into a business friendly city that enjoys sustained growth, economic investment, development, and job creation.

“It’s time for LA to LEAP forward and make this City business friendly, provide real economic growth, and invest in our future worforce and secure our place in the global market.”




1. Implement a Storefront Improvement Program -offer funding to help store owners spruce up business districts.
2. Create a Centralized Grants Unit –work toobtain more Federal, State and private grants, which translate into local contracts.
3. Act on the Development Reform Committee Report“Permit Streamlining and Bureaucratic Reform.”
4. Implement a Clean Technology Initiative -promote a thriving local clean-technology sector as a job growth engine.
5. Institute a Tax Direct Payment Program -let businesses pay use taxes directly so the tax money stays local.
6. Promote a Biotechnology Sector -marketing L.A. to academia and the private sector as a biotech center.
7. Create an L.A. Economic Development Department -consolidate economic development activities into a new City Department.
8. Partner with LAUSD- job training and placement programs within L.A. high schools.
9. Improve LAX- make LAX a world-class airport, with more international routes and a better passenger experience.
10. Create More Port Jobs– Invest in employment opportunities at the Port of Los Angeles.
11. Implement a Merit Pay System -provide incentives for workers who find savings and efficiencies in services.
12. Expand Business Tax Reform- further cuts to Business Tax.
13. Implement a Charter Change - Amend the City Charter to enable the Mayor’s Business Team and Council to offer incentives for businesses to relocate to L.A.
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Boren's Laws of the Bureaucracy: 1. When in doubt, mumble. 2. When in trouble, delegate. 3. When in charge, ponder.