L.A. Must Redefine Growth to Balance Everyone’s Needs : Economy: Rules and fees need an overhaul to encourage job-creating development.

There can be little doubt that Los Angeles’ economy has picked up. In the past 12 months, the unemployment rate here has dropped by a full point, yet the city’s jobless rate is still higher than the county’s and state’s and several points above the national average. A big part of why Los Angeles lags is that the city is simply not competitive in offering businesses reasons to stay.

A recent survey of corporate executives ranked Los Angeles 59th out of 60 in terms of friendliness to business. Some of that is perception, but some of it is true. Consistent shortfalls in the city’s budget over the past two decades, coupled with the anti-growth sentiments of the 1980s, made it politically easy to burden new businesses by forcing them to pay disproportionately for their share of city services. Fees for the repair and maintenance of the city’s infrastructure is a good example of this.

When a business wants to expand or build a new site in Los Angeles, it is often hit with fees to rebuild a nearby portion of the city’s infrastructure. These fees are usually way out of proportion to the local impact of what the business wants to do.

The irony of this practice is that it ultimately does more harm than good. Unreasonable infrastructure fees only drive away jobs and tax dollars, and the city ends up with even fewer resources.

Further, infrastructure fees are but one of the unfair burdens city government places on local business. There are also the excessive costs and delays associated with the building-permit process. This process--in spite of the mayor’s efforts--is one of the city’s biggest barriers for employers.

To remedy this situation, we need fundamental changes in our laws and rules.

If one doubts the impact of the building process on the city’s prosperity, consider that the UCLA Business Forecasting Project estimates that every $1 billion in new building permits translates into more than 27,000 new jobs and an increase in city revenues of about $28 million. From 1988 through 1992, applications for building permits in Los Angeles dropped 53%, in total value from $4.5 billion to $2.1 billion.

This process also hinders redevelopment in those areas of the city most in need. Low-income developers often do not have the holding power or cash flow to carry themselves through the lengthy process.

Rules and laws like those now governing our permit process need to change. The city needs to adopt policies focused not on pro- or anti-growth, but on reasonable, managed growth. City government must be able to eliminate red tape, and offer predictability and competitive pricing for those willing to invest in their home or business, while ensuring that environmental concerns are addressed.

Reasonable, responsible development can mean jobs and tax dollars that can be spent on police and teachers. It can mean sorely needed low-income housing, progressive infrastructure changes and a fiscally solvent and proactive city. Indeed, this responsible managed development can be the economic backbone that helps Los Angeles meet the extraordinary challenges it faces over the next 20 years.