Business Group Sponsors Secession Debate

An influential San Fernando Valley business group prepared to weigh in on secession by hosting a conference and debate Thursday, where a new study was released that finds Los Angeles does not keep and attract business as well as smaller cities.

The Valley Industry and Commerce Assn., which sponsored the event in Studio City with several other business groups, plans to send ballots to its members next week, asking whether it should support the Valley’s breaking away from Los Angeles. The conference was seen as an important last chance by both sides of the issue to influence the association’s 300 corporate members, which include the Walt Disney Co., Universal Studios and Southern California Edison.

“With 2 1/2 months left before the election, it’s important we take advantage of every opportunity to explain to the business community the advantages of a smaller city with lower taxes,” said Richard Katz, co-chairman of the Valley Independence Committee.

Katz was particularly encouraged that secessionists’ complaints were supported by a study released by the Rose Institute of State and Local Government at Claremont McKenna College.

The study found that Los Angeles was in the bottom half of the county’s 88 cities in collection of sales tax per capita, an indication it is not doing well in attracting and keeping retail business and convincing residents to shop in the city, said the institute’s Steve Frates. “Los Angeles could easily increase its sales tax 10% to 12% if it were more business-friendly,” he said. Los Angeles, for instance, has the second-highest tax in the county on gross receipts.

“The Rose Institute adds facts to what is commonly believed to be true, which is that the anti-business nature of the city of L.A. draws businesses out of the city,” Katz said.

The study also found that Los Angeles ranked 38th out of 88 cities in the county in 1999 in the amount of state money received per capita and ranked 9th in federal funds, doing less well than Long Beach and other smaller cities.

Addressing the Valley claim that it doesn’t get its fair share, the study found that only a fraction of the city’s redevelopment money is spent in the Valley.

And while Los Angeles ranks 10th countywide in per-capita spending on police, per-capita spending in the Valley is about half that.

City Controller Laura Chick said Los Angeles is addressing the problems that the study identified, beefing up its police force and embarking on tax reform. Those issues, she said, don’t warrant breaking up the city.

“It’s going to take five to 10 years of pain and uncertainty to get a new city on its feet,” she said. “Why can’t we allow Los Angeles to take two to four years to turn the ship around, when it is already turning?”

The debates at the conference demonstrated how Los Angeles’ business community is sharply divided, largely along geographic lines, over the issue.

In one debate, the pro-secession side was taken by Joel Simon, vice chairman of the United Chambers of Commerce of the San Fernando Valley, which recently voted 31 to 13 to support secession. The opposition was handled by Rusty Hammer of the downtown-based Greater Los Angeles Area Chamber of Commerce.

Simon cited the new study and said a smaller Valley city would cut business taxes. “The plain truth is, Los Angeles is not business-friendly,” he said. “L.A. has a bloated government. It wastes money.”

Hammer noted that the city has begun tax reform and reduction. The fact that more than half of the council members are relatively new gives momentum to that reform, he said.

“The real issue here is things that have brought about reforms include term limits, which have brought us a new generation of leaders,” Hammer said.

Some attendees were surprised that Mayor James K. Hahn did not attend the conference, which would have provided a chance to influence next week’s balloting. A Hahn representative said he was on vacation.

Meanwhile, Hollywood secession leader Gene La Pietra sought to woo business leaders in that community with a lunch Thursday and an outline of plans to cut the business tax by at least 50%. The plan would provide further tax credits to new businesses moving into Hollywood as well as firms that use local vendors.

“We are going to be a company town. We are going to be a union town,” he told the 100 people present, including members of the Hollywood Chamber of Commerce.

Citing West Hollywood as the model for what Hollywood should become, La Pietra also previewed a “rough cut” of the television commercial that the secession group plans to begin airing soon on cable and broadcast stations.

Featuring a German rock band singing “Hey L.A., set Hollywood free. Give her back her dignity,” the videotape shows community landmarks such as the Hollywood sign, as well as La Pietra speaking about how the community will be revitalized.

Also Thursday, Watts community activist Daude Sherrills announced a rally today to seek support for a plan to put a measure on next year’s ballot to have Watts and South-Central Los Angeles break away from Los Angeles.

“Watts as a community has been misrepresented,” he said.