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Business Assistance Agency on Road to Recovery

September 12, 2000|KAREN ROBINSON-JACOBS

VAN NUYS — Last summer was not a very pleasant time for the folks at the Valley Economic Development Center.

The longtime president and longtime chairman were facing questions about financial deals, media scrutiny was intense and board members of the Van Nuys-based business assistance agency were bolting for the door quicker than you could say "meeting adjourned."

It was not exactly the summer of love.

Today, months after two reports found the agency to be sound, and determined that there was no wrongdoing by agency officials, the VEDC appears to be on the mend.

Next month, eight new members are scheduled to join the board of directors, which had dwindled to seven members, down from 17. And business is good.

"We're in a good place at a good time," said Roberto Barragan, who took over as president of the nonprofit in January. "With this economy, business growth is huge. We're catching a wave and making loans as fast as we can make them.

"Right now it's a good time to be in this business."

It was not always thus.

Last year, key board members and agency staffers departed the agency amid controversies involving former president John Rooney and board chairman David Honda.

Rooney brought the agency to prominence after the 1994 Northridge temblor with an ambitious plan to revitalize quake-battered businesses. But he came under scrutiny after he and a staff member accepted fees for brokering a private investment for a Canoga Park sign maker.

At about the same time, Honda, a building contractor, was criticized for accepting work from a VEDC loan client.

Alarmed by the reports, Mayor Richard Riordan's office initiated a review of the specific allegations--an evaluation just shy of a full-fledged audit. The final report, released early this year, said that neither deal violated agency procedures. An internal audit also turned up no irregularities.

Despite the clean bill of health, the VEDC has changed its policies to prevent such deals in the future--even though agency officials still say there was nothing broken to fix.

"What they did was perfectly legal," said Marvin R. Selter, the board chairman. "We did what we did because we wanted to be above reproach. We didn't want anyone to come back at any time and even insinuate that we were doing anything wrong."

Selter and Barragan also said they waited until the city completed its review before approaching prospective new board members.

"It was a very significant issue for me," said Lee Kanon Alpert, an Encino real estate attorney and a member of the Los Angeles Airport Commission. "I needed to know where the organization was. I waited to ascertain that the audit came out clean. I was assured of that before I agreed to come on board."

Alpert has been tapped to chair a newly created VEDC advisory board. Alpert said the panel will meet infrequently and provide informal advice. The board of directors retains all policymaking authority.

The six-member advisory panel includes attorney David W. Fleming, chair of the Economic Alliance of the San Fernando Valley, and William Hosek, dean of the Cal State Northridge business school.

For the board itself, the agency has gotten commitments from Bruce Ackerman, president and chief executive officer of the Alliance, former Assemblyman Richard Katz and accountant Mel Kohn, who heads the city panel charged with business tax reform.

The new VEDC board is scheduled to be publicly introduced Sept. 27 at a reunion for some of the more than 1,000 people who have gone through the agency's entrepreneurial training program.

Ackerman served as the head of the Van Nuys Chamber of Commerce when it created VEDC's forerunner, the Van Nuys Area Development Corp., in the late 1980s.

"I'm not just interested in that organization, I gave birth to it," Ackerman said. "I'm committed to working with the VEDC."

So far this year things seem to be working out for the once-beleaguered agency.

Barragan said the agency has received two contract amendments to expand the state-funded services it provides small business. Last year, the agency received $750,000 from the state, compared with $1.3 million this year.

Included in that increase is $100,000 to establish a Small Business Development Center in Pacoima, taking the place of a city-funded Business Assistance Center. The new center is expected to open in October.

Also next month, the center will graduate the first class from its micro-enterprise program, designed to help welfare-to-work recipients create their own businesses.

The city of Los Angeles thawed out funds that were frozen while the agency was under scrutiny.

"Immediately after all the business with the city, they turned around and asked us to take [$100,000] to do comprehensive economic development strategy for the San Fernando Valley," said Barragan, adding that the recently completed study eventually will be submitted to the U.S. government to help secure federal funds for the region.

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