Lately, the recurring headline "City Offers Tax Breaks to Business" brings to mind a vision of Los Angeles wearing not some sober three-piece pinstripe, but tricked out in fishnet stockings and slit skirt, swinging its empty handbag and batting a set of picket-fence eyelashes at the big butter-and-egg men:
Howzabout we do a little trade, big boy? Stick around, make yourself comfy. Believe me, I'll make it worth your while. Be sure to ask me about my frequent-friend discount.
Making Los Angeles a buddy to business was the first item on Richard Riordan's "to do" list--streamlining a Rube Goldberg tax and permit system so hidebound and muscle-bound that it allowed four businesses in 10 to dodge their tax bills.
The second task has been to set out a buffet of subsidies and tax breaks to lure businesses if they aren't here already, and to persuade them to stay put if they are. All those Incs. and Corps. have plenty of cities to choose from--not so good-looking as L.A., maybe, but a lot cheaper and more pliant.
So L.A. has, among other projects, arranged $70 million in various tax breaks to keep DreamWorks in Playa Vista, a deal characterized by critics as millions for billionaires.
It has changed the tax code to keep five HMOs from moving out of town, at an annual tax break of $7 million to $25 million.
It has knifed 80% off the tax tab for multimedia companies; that costs city coffers a half-million-dollar tax whack, but officials confidently expect, as they do with every tax subsidy, to get that back and then some, from (cue the celestial trumpets) creating jobs.
But what's their collateral? What are the warranties that the company will stay, that the new jobs won't be downsized or sent south of the border, that some floozy city won't show up with a better come-on and then it's wham bam thank you L.A., ma'am?
When we cast all that civic bread upon the water, how much is guaranteed to return in Biblical bounty--and how much just becomes a soggy free lunch for bottom-feeders?
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A new study--stay with me here--a new study of a specialized pocket of civic subsidy, the Community Redevelopment Agency, has done some tallying about the nearly $190 million the CRA spent boosting nine risky commercial developments over seven years.
It found that the money attracted a supermarket and good-paying jobs to a neighborhood in sore need of both. Such modest projects did better than huge ambitious ones like Baldwin Hills Crenshaw Plaza and Grand Central Market Square, which will cost the city $65 million over 30 years.
