New Industrial Complex in Valley Signals the Rebirth of Los Angeles
VAN NUYS, CALIF.
WHEN General Motors closed its last southern California plant here in 1991, the move was widely seen as the end of an industrial era for the sprawling San Fernando Valley brought on by changing global economics.
The phrase of British historian Martin Weiner - "psychological deindustrialization" - was bandied about to express the loss of faith by city leaders in their once-vibrant community, now metamorphosing, said some, into a third-world sinkhole.
With the recent announcement that the long-idle plant will now be reborn as a $100 million commercial/light-industrial complex, pundits and public officials alike are talking of regionwide rebirth.
"This is highly symbolic for the Valley and Los Angeles as a whole," says Larry Kosmont, president of a real estate firm specializing in public-private transactions. "It's a coup that the city is both revitalizing a bad area of town, and simultaneously signaling they are aggressive about changing."
Changing means finding ways to streamline the often time-consuming and costly business regulations that have contributed to an exodus of California businesses to neighboring states. As in the case of another recent high-profile site renovation - Steven Spielberg and partner's DreamWorks SKG studio in Marina Del Rey - Los Angeles is also providing millions in incentives: everything from sewer hookup fees to road subsidies.
"Because this is a joint city-private deal, L.A. will get a chance to learn how straitjacketed their own system is," says Kosmont. "They will be very motivated to streamline the process."
No tenants have yet been announced for the new 65-acre project, scheduled for groundbreaking in summer 1997. But the combination of retail stores, theatre complex, police station, and light industry is expected to create 2,000 full-time jobs. General Motors will retain 27 acres of the total 100-acre lot for a vehicle-emissions testing center.
Such activity won't quite replace the 2,600 jobs lost at GM or generate as much ancillary income for area businesses. But it will replace an eyesore in a stretch of town blighted by boarded-over restaurants and abandoned retail space. New employees are expected to be recruited from within a five-mile radius.
"The important thing is that they are keeping some light manufacturing," says Joel Kotkin, senior fellow for the Denver Center for the New West. "They have correctly answered the question of how do you rebuild an area economically by putting in more than just another mall."
Some objections have been raised about the project, from possible traffic congestion to the need for more police protection in the crime-heavy neighborhood. There have also been concerns over the $4 million in incentives reportedly given the project.
"Some are concerned that if you give away too much up front to too many of these rehabs, it can end up creating a tax burden on the rest of the area," says Jack Kyser, chief economist for the Los Angeles Economic Development Corporation. "That hasn't happened in this case yet, but there are questions of precedent."
Mr. Kyser says the plant project is sending a signal to investors from Taiwan, Japan, China, and Vietnam who have been pouring money into the area in recent years. He hopes it will encourage them to buy up industrial warehouses abandoned in the area's defense-aerospace downsizing.
"This project is a big signal that Los Angeles is on the rebound," he says.
Noting the area has suffered serious image problems worldwide because of five years of recession and natural disasters, he adds: "The buzz on the street is that the city is a good investment because it's on the way back."