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Council Balks At Proposed ELB Enterprise Zone Expansion But OK's Two Specific Sites, Including 3340 Los Coyotes Diagonal For Northwest Airlines Reservation & Training Center

Issue triggers significant Council and City Manager discussion of City Hall economic development policy; we provide extended transcript excerpts

(March 22, 2001) -- Following an intense discussion by Councilmembers and the City Manager of City Hall economic development policies rarely discussed publicly, the City Council voted on March 20 to modify a city-staff proposed plan to expand LB's state-designated "enterprise zone" into ELB commercial areas, limiting it to two specific addresses with businesses currently contemplated.

Staff's proposed enterprise zone expansion (in which businesses and developers generally in economically distressed areas receive state tax benefits) would have included flourishing commercial areas along Los Coyotes Diagonal at Spring Street and Willow St. was the first LB media outlet to report this, posting a detailed article on the subject prior to the Council meeting.

Council proceedings

6th district Councilwoman Laura Richardson-Batts triggered the half hour Council discussion (extended transcript excerpts, below) by refusing to support staff's enterprise zone expansion as proposed.

She said she would support expansion limited to two addresses where identifiable businesses were contemplated: 3340 Los Coyotes Diagonal (for a Northwest Airlines Reservation and Training Center) and 5236 Los Altos Plaza (for retention and expansion of Flexo Hiner & Partners). A third proposed area southeast of Willow St. & Redondo Ave. where no specific business was identified was eliminated.

During frequently intense colloquy, Councilwoman Richardson-Batts aired what she described as "dirty laundry" surrounding City Hall's pursuit of new businesses (transcript excerpts, below). She expressed her view that staff's proposed enterprise zone expansion was not within the intent of the state Enterprise Zone Act and insisted there be no further expansions "until we address what we have committed that we're already gonna do. And anyone who wants to take a tour with me to see that what we've said we're gonna do we haven't done, I'd be happy to take you to see that."

The CA Enterprise Zone Act specifies in its findings and declarations that "there are certain areas within the state that are economically depressed due to a lack of investment in the private sector. Therefore, it is declared to be the purpose of this chapter to stimulate business and industrial growth in the depressed areas of the state by relaxing regulatory controls that impede private investment."

The Act continues, "No enterprise zone shall be designated in which any boundary thereof is drawn in a manner so as to include larger stable businesses or heavily residential areas to the detriment of areas that are truly economically depressed."

Council tension on the issue soon became evident. After the clerk read the item, 3d district Councilman Colonna immediately moved approval. 5th district Councilwoman Kell (in whose district two of the proposed sites were) then took the floor.

Councilwoman Jackie Kell (5th district)

[T]his particular issue involves, allows for the attraction of a Northwest Airlines Reservation and Training Center, and this is going to, this major airline presence in Long Beach will provide 350 jobs which are immediately going to come into the city, and the creation of approximately 70 jobs annually.

So, this is a reuse of a blighted, vacant, 35,000 square foot building and it's behind the Ralphs building on Los Coyotes Diagonal. So, I certainly am endorsing this because it's going to create jobs, it's going to train people for jobs and it's for reservation training.

Councilwoman Kell didn't mention the other areas along Los Coyotes from Willow St. to Wardlow Rd. that were within staff's proposed expansion area. The neighborhood is surrounded by middle-class single family homes and served by commercial nodes that contain higher-end stores and upgrading facilities

Pavilions Shopping Ctr

These include a "Pavilions" and neighboring specialty tenants including the "It's a Grind" coffee house, boutiques and a vitamin store. A new Blockbuster replaced a former Blockbuster at Los Coyotes/Wardlow that closed due because the Ralphs store is expanding into a full service amenity market.

3340 Los Coyotes

The 3340 Los Coyotes Diagonal site (right side of photo) proposed for the Northwest Airlines Reservation and Training Center is behind the expanding Ralphs market just south of Wardlow Rd.

Councilwoman Laura Richardson-Batts (6th district)

...The true spirit of what our request is tonight I do not agree with and I have some very serious concerns with what we're doing. However, I am going to support it with certain requests that I have.

Number one, I'd like request that in the future, when we have items such as expanding business enterprise areas...that clearly we should be given more than 2 to 3 days to review this type of information...To be given something late Thursday and expected to review it and answer questions, discuss and go through the whole thing, this is just not sufficient amount of time...

The second concern that I have is that we are going to bring these issues forward that as staff we really need to have all the information so that Councilmembers can make the appropriate decisions. For example, one of the aguments of why we should support this issue is that even though the expanded area may be in a different area than the current predetermined [enterprise zone] areas, the previously predetermined areas have an opportunity for individuals to be hired. Well when I asked the question, can you show me that individuals in my predetermined area have been hired, we were not able to provide that information. And I think that that information is very critical to make a decision if I would choose to support something like this...

The third thing is, I'd like to request that since this issue was brought to us in what I would deem to be a very late notice situation, I would like to request that the resolution be amended, and I have spoken with the maker of the motion, Councilmember Kell, to have these locations limited in scope, specifically to the properties that I will lay out in the resolution and not to the extended areas, and so that that way, we can preserve the intent of what I believe this business enterprise [zone] area is.

The fourth thing is, I'd like to see, and I have a commitment from the staff here with the city, to work with my office...that we really begin a proactive process to work with the current identified business enterprise [zone] areas...

If you compare economic revitalization to the areas we're talking about tonight, compared to areas in districts 6,7,8 and 9, and even some in 2 and 1, clearly I don't believe that this is the intent of the program. However, I am willing to support it because we have worked with several businesses and we are working to have jobs...but I am very concerned that we don't do this again because I do not believe that this is the intent.

...And lastly, that no aditional [enterprise zone] expansions will be requested until we address what we have committed that we're already gonna do.

And anyone who wants to take a tour with me to see that what we've said we're gonna do we haven't done, I'd be happy to take you to see that...

Councilman Frank Colonna (3d district)

I think we're moving in a very precarious direction if we follow what the Councilwoman from the 6th district is trying to imply.

And I think that on a case by case basis, each of those that are working in our own districts should have the opportunity at any time to have any discussion openly regarding the economic vitality of not only the district but the city as a whole. I'm really concerned about where we start taking numbers, and start counting how many people for example from the 3d district work at Boeing, and vice versa, how many people from the 8th district come down and work in Belmont Shore.

I think this is a city at large and that we as Councilmembers should be working hand in hand with every other Councilmember in the city in order to make sure that the common denominator is that we want to work any way we possibly can to try to keep our entire city vital. And there are areas in my district that are in need of repair and work and it's kind of interesting, because I have at least one location which is a redevelopment district in my district, which is at the lower eastern section.

And if someone were to drive by and decide, well I don't really think that that's a blighted area by my definition and I don't think that we should do something there, I think that's incorrect. And as a result, I think that as a Council, we should maintain our total flexibility on this issue for the common good of everyone who lives and works in the city.

Councilman Dennis Carroll (4th district)

...I am appreciative of the comments of Councilmember Batts. She's concerned about her district. A portion of my district is certainly in need of these kinds of enterprise determinations and the incentives that will increase business there. Redevelopment and enterprise districts are one of the most complicated and sometimes distorted uses, and I think it's an issue that before we reach conclusions prematurely that perhaps the Council itself ought to formulate our own policy. I know some of us are new on the Council and may not have as much experience and understanding of it, but I certainly understand exactly what the Councilmember is saying. And I'd be supportive of exploring this and formulating a policy as Councilman Colonna has said that makes sure that the good tidings get spread around to the entire city.

Councilwoman Laura Richardson-Batts -- Second time

...What even more concerns me is a comment that was made that any Councilmember at any time can request a meeting about the economic vitality of their area. Let me tell you, I've had many of [such] meetings, way too many meetings. And I have yet to have anyone come back and say we're gonna be briniging in, we've talked to Ralphs and we're encouraging Ralphs to come to the 6th district; we've gone out and talked to Bank of America and we're gonna encourage them to come into the 6th district.

There's one thing about talking but there's another thing about doing. And we need to be honest here. There's a lot of activity going on with Queensway and many other projects but that same intensity is not duplicated throughout this entire city.

And that's why business enterprise [zone] areas have been set up. They're set up to attract companies to come to areas that they would not normally come to, and to give them the incentive to do so.

And so to play something else, I think, is really we're not being accurate in terms of what's happening...

Councilman Jerry Shultz (9th district)
and Colloquy w/ City Manager Henry Taboada

I think the big question here is the selection process that the city uses, and so I'll ask the question to staff. How do we weight the selected businesses we're trying to attract? For example, is it by the number of employees it will bring, or is it by the blighted condition of the area around it?

And here's an example. Let's say that in the 5th district, out at the airport, in a nice area, there's an industrial building that's been vacant for a period of time and it will attract 200 employees. Let's say in my district in a blighted area is a similar building that will only attract 50 employees, but it's very blighted.

How is it weighted? Is it more towards solving the blight or more towards getting more employees into our city?

City Manager Henry Taboada: ...The first thing we rely on when we approach this issue is what is Council policy, and clearly there seems to be a desire on the part of this Council to at least examine what that Council policy is, and certainly we're not going to stand in the way of your examination.

But I think it's a little unfair to characterize this as something that was done outside the bounds of established Council policy because this report is being brought to you, and these recommendations are being made to you for your consideration based on previous Council policy that we have relied on...

The second is, what benefit does it accrue to the entire city. If we are asked by a business, or as part of our economic development strategy have an opportunity to attract a business who otherwise would not perhaps be inclined to want to locate within the city, and if we can present to them a benefit that is not available in some other city, and if we have the ability within the law, and within the guidelines established by the state for establishment of a tax credit area, then certainly we would take the advantage, or take the opportunity, to present that to a business to attract, retain or enlarge a business and then bring to you a request to designate an area not previously designated as eligible number one, and two, desirable for, inclusion within this enterprise zone.

We have never, I don't think at least since I've been involved with this, considered this on a district-specific basis. We've always looked at it on a citywide basis because our belief has been that if you bring a business to the city, regardless of where it's sited, and if it's within an enterprise zone designated area, then the benefit accrues to the city, and that whatever tax is paid and fees paid to the city become general fund monies which are then distributed throughout the city.

So I think we've been very consistent in that approach and have not had any guidance to the contrary, but certainly if it's the desire of this Council on April 3 to explore this issue, we'll be happy to provide a staff report that brings forward to you the original program, how it was established, what were the parameters, how we were guided by this Council in the past to expand and develop this program.

I've got to be honest with you. We took advantage of this program to the maximum extent possible in order to be able to attract as many businesses to this town as we could. 50% of the city's real estate is contained within this enteprise zone. 50%.

What we're asking to add tonight, and I'm not quarreling with your decision one way or the other about whether you'd include the entire 5 acres, or parts of the 5 acres that we're asking you to consider tonight, I'm mindful that there are issues here that need to be addressed, and should be addressed, and I think that the position of Councilmember Richardson-Batts to not interfere at all with the particular businesses that are included is a good compromise for this evening...

...But certainly we as a staff need to understand clearly what this Council's policies are for the future, and so we'd be happy to bring that report to you with our recommendations and our options and our findings and have you decide policy for the future...

Councilman Shultz: Thank you, Henry. I wasn't criticizing policy; I was simply asking for clarification. And I suppose then, with your response, it would appear that in my scenario that I gave you, if the better good of the city is to bring in the most tax revenue dollars then we would go with the nicer looking areas that brought in more employees as opposed to a blighted area with fewer employees. Would I be correct in saying that at least?

City Manager Taboada: Well I don't think we can make that, I don't think I can clearly make that finding. I think that we would look at each opportunity on a case by case basis, to see if one, it met the criteria, two it was consistent with your policy, three we had a chance of making it work, and four it would be within the framework of our economic development agenda. If it meets all of that criteria, it's a case by case basis kind of recommendation.

Councilman Shultz: I'm not fully convinced but for now I'll live with it.

Councilman Ray Grabinski (7th district)
and Colloquy with City Manager Taboada

...Correct me if I'm wrong or maybe you can just give me this, the intent of the enterprise zone was revitalization, am I correct?

City Manager Taboada: That's correct, to train people who would otherwise be unemployed and to revitalize the economy of the area.

Councilman Grabinski: And didn't that also include that if you bought some of the equipment, if you bought some of the supplies, you also received a discount if you bought them in the area?...

...Melanie Fallon, Director of Community Development: Yes, you are correct. It does include credits for capital improvements and machinery and the like.

Councilman Grabinski: So what it means is that a small business in another part of the city, the 9th district or the 8th. the 7th or the 6th or wherever, might not be able to get some of those credits if what we're doing is kind of leapfrogging to another part of the city because there's an advantage over there.

City Manager Taboada: They could get the same advantage if a company was willing and desirous of locating in another area.

Councilman Grabinski: But my point is, if you've got a zone right now that you've determined that you want to do this kind of business in, and you have not completed the task...if you look like you can move this any place in the city, I guarantee you I'd want to be in the area of the lowest crime, I'd want to be in the area of all the rest of those things, which would mean you'd be leaving out those areas that the enterprise zone was precisely put together for, high unemployment and all the rest of it. You follow where I'm going with this?

City Manager Taboada: I do, and I don't quarrel with that. But my only caveat is, that if we can attract, you know, a Northwest Airlines Reservation and Training Center to a specific location that is now not covered, and part of the incentive to get them there is designating this as a zone...and if those 350 jobs, because of the tax credit, require that individuals who are unemployed, underemployed or what have you, our first priority for those jobs, then you've accomplished an objective. You've brought jobs to the city and you've created employment opportunities which otherwise wouldn't be here.

But the corollary to that is that you're quite correct and Councilmember Richardson-Batts is making a very good argument that if you continue to do that without regard to some sort of an incentive program for bringing people into blighted, depressed neighborhoods that you're not really fulfilling the true spirit of the program. So there's valid arguments on both sides...

Councilman Grabinski: ...And then what could happen very easily is someone could challenge us and say, you're using state monies in a way that wasn't orignally intended and then this body would be in trouble for it because we didn't take enough time to review it all...I don't want look like I'm pickin' sides here, but clealy we need to make sure that we go with the intent of what the enterprise zone was.

Councilwoman Laura Richardson-Batts -- Third Time

...The intent of this [enterprise zone] program was for depressed, economic areas. And if you drive the three areas that we're proposing today, I don't think you're gonna be able to find someone to say this is a depressed, economic area.

And so what I'm saying is, I feel extremely uncomfortable and if I were to call the California Trade and Commerce Agency, I seriously doubt if we want the California Trade and Commerce Agency to come look at what we think we call a depressed, economic area...

I am support the two locations that we have identified businesses with jobs. However, the continuing of this is wrong. It's not the intention of the program. And I think we have to be real honest about this issue.

And now that we're going to the n-th detail, I have no problems with bringing the dirty laundry out. When Northwest Airlines came to Long Beach, and they said we want to move to Long Beach, I asked the question here of staff. Did we take them to these other identified enterprise [zone] areas and say, why don't you try here? The 6th district or the 7th district which is also right near the freeway.

But no, this company said we want to go here, and we will come here to Long Beach if you give us this credit that we know is available.

That is wrong. That is not the intent of this program for companies to tell us to give them credits to encourage them to move here...

Testimony from the public

Ms. Colette Marie McLaughlin: ...[I]f you want to put and subsidize rich corporations that are big, just 'cause they're big to go wherever they want, they're going to unfairly compete with our smaller businesses that actually damaged the small businesses that are in these places that shouldn't be developed.

I think that it is the most immoral...and fraudulent behavior that I think is an embarrassment, I'm glad it's so late 'cause I wouldn't want my children to see such things going on. And it makes me disgusted to even stand in this chamber to have you doing something with taxpayers' money that is purely, in my opinion, absolutely fraudulent and it damages the low income neighborhoods because now they're cut out of the deals., ..

[At the conclusion of her testimony, thanks Councilwoman Richardson-Batts] I'm very glad that you're protecting the people that you're supposed to represent.

The chair (Vice Mayor Baker) asked if the maker of the motion accepted Richardson-Batts' modifications as a friendly amendment. It was accepted and the Council voted on the resolution as modified by Richardson-Batts. It passed unanimously.

The resolution passed by the Council authorizes the City Manager to submit a request for the Enterprise Zone expansion to the California Technology, Trade and Commerce Agency. That state agency oversees implementation of the Enterprise Zone Act and will decide if the Enterprise Zone expansion proposed by LB City Hall is appropriate.

LB City Hall's use of the Enterprise Zone Act to provide taxpayer subsidized benefits in ELB raises issues similar to City Hall's controversial use of Community Development Block Grant funds several years ago to help secure a Loehmann's store for ELB's pricey Marina area. At the time, a number of city residents testified against the CDBG block grant arrangement, claiming it was an inappropriate use of money meant to help distressed areas.

LB's current Enterprise Zone includes roughly 26 square miles (LB's total area is about 52 square miles), until now mainly in central, western and northern areas of the city.

Additional noteworthy matters

  • Reached after the Council meeting, city staff told that no city financial incentives (i.e. sales tax rebates, or the like) were part of the package used to attract the Northwest Airlines facility. (Some city business assistance services, ombudsman and the like are involved, but not direct city financial subsidies.

  • Staff also indicated that the 350 jobs mentioned in staff's description (which was read at the meeting by Councilwoman Kell) represent the number of persons expected to use the Northwest Airlines facility (i.e. the trainees.)

  • Staff's briefing memo to the Council indicated LB "is one of only three cities in southern California to have an Enterprise Zone designation, the others being Santa Ana and Los Angeles." However, the web site of the CA Technology, Trade and Commerce Agency lists several southern California areas besides LB, LA and Santa Ana with Enterprise Zone designation: Agua Mansa (Riverside, Colton, Rialto), Altadena/Pasadena, Antelope Valley (Palmdale, Lancaster, Los Angeles County), Bakersfield, Calexico, Coachella Valley (Coachella, Indio, Thermal), San Diego-San Ysidro/Otay Mesa, Southeast/Barrio Logan.

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