President Max Nikias’ Address to LAEDC Board: USC Investing in Southern California’s Economy

Max Nikias: Although more than a century has passed between USC’s founding in 1880 and the creation of the Los Angeles Economic Development Corporation in 1981, we share a common interest in making LA County a vibrant place for new businesses and opportunities. USC’s commitment to this region is reflected in many ways: in our impact on the local economy, in our partnerships with our local community, and in our ability to provide first class healthcare to the citizens of LA County.    

Let me begin with the many ways USC impacts our economy. USC today is the largest private employer in Los Angeles, but consider the number of people that USC brings to Los Angeles. Last year USC enrolled 37,000 students from all 50 states and 115 different nations. USC has the largest enrollment of international students in America; we have more than 8,000 international students enrolled at the university today. We also draw faculty and staff from around the nation and, of course, from around the world. All of these people have relatives and friends who want to travel to Southern California to visit them and spend time with them. And when they do come, they explore all that this area has to offer. The hundreds of thousands of visitors that USC attracts each year results in millions of dollars for this city and the surrounding region. In addition to bringing people from around the world, USC also plays a major role as an economic engine for Southern California. Just like the LAEDC, we’re working to generate jobs for people throughout the region.    

According to a 2009 study, USC contributes nearly $5 billion each year to our local economy. We employ more than 22,000 people. But our economic impact extends far beyond our two campuses, and every year USC invests a total of $32 million in the communities surrounding our two campuses. Last year USC attracted some $640 million for cutting edge research and development, and we brought in another billion dollars in philanthropic gifts. Our annual expenditures also stimulate more than 20,000 jobs outside of the university, and for every dollar that USC spends in LA County, an additional 63 cents of value is created somewhere else in LA. This coming year we project in our university budget that our operating budget will be close to $3.5 billion annually.    

Let me share with you how USC is helping to create jobs. Over the last few years this region has been hit hard by the economic downturn, but when other businesses were cutting jobs, USC was adding new employees. Since April 1st, 2009, the Keck Hospital and the USC Norris Cancer Hospital have added nearly 1,000 new jobs. Over the next two decades the master plan for our Health Sciences Campus spells out the creation of 9,000 additional jobs.     

USC also acts as an economic engine by supporting and creating new businesses. In 2005 we established the USC Stevens Institute for Innovation, which was designed to help our faculty and students maximize the impact of their ideas and the impact of their intellectual property. Already more than 50 active USC start-ups have been created from our own intellectual property, and more than half of them are in the biomedical technology sector. So if we had a biomedical tech park on the Health Sciences Campus, or near adjacent to the campus, these jobs and these start-ups would have been right there in East LA in the heart of downtown. In the past three years, during the depths of the great recession, these start-ups have raised more than $400 million in venture capital money. The Wall Street Journal wrote an article on the USC start-ups, noting that start-ups are planting the seeds for new businesses and industries that will help our local economy flourish in the years ahead.    

We’re planning a major development project that will transform the neighborhood surrounding our University Park campus. The Village, or the Village at USC, is the largest development project ever proposed in the history of South Los Angeles. It will be built on land that has been owned by the university for many years. No public subsidies, funds, or bonds will be used for the construction of this project.    

We believe this private development will provide enormous benefits for our community, and that’s because the village at USC will create 12,000 new jobs. There will be 4,000 jobs during the construction process. I remind you this is an industry sector where the unemployment rate is more than 40 percent in this region. Of course this project will also generate 8,000 permanent jobs. Although it has endured a long and sometimes very difficult journey, I want to believe that we can now see the finish line. In May, the USC specific plan was approved by the LA City Planning Commission in a 6 to 2 vote.    

The LAEDC is one of the organizations that has strongly supported the Village at USC, and I’m very grateful to the members of this board for writing a letter to promote this USC development project. We’re now only two steps away. In July, our specific plan will have a hearing in front of the Planning and Land Use Management Committee at City Council. If everything goes smoothly, this project could reach a vote for the entire LA City Council in August, and I’m told we need at least ten votes. However, I want to remind you that we still need your help for this project to move from blueprints and sketches to bricks and mortar. You can attend the hearings, you can make phone calls, and you can write letters. Do whatever you can to show your support for a project that will create 12,000 new jobs right here in the heart of the city. By the way, you should know that we have all the money for this development, and it has been in our hands and accounts for more than a year. It’s close to $1 billion, and I want to remind everybody that for this particular project we have many naming opportunities too.    

USC is also working on several other projects that will revitalize our local neighborhoods as well as invigorate the local economy. Over the last few years one of the most successful programs has been the USC Family of Schools, which partners with 15 elementary and secondary schools in our communities. One of the flagship programs is the neighborhood academic initiative where we work closely with kids beginning at the 9th grade. We work with them and their families in preparing these kids to do well and to go to college. We have more than 600 students enrolled in this program. Just a month ago we celebrated the graduation of 55 kids from this program; all were underrepresented minorities. All of them are going to college, and 27 of the 55 were accepted to USC with everything paid.    

Now we want to combine our educational expertise with our entrepreneurial spirit. We’re currently developing a major new initiative called the USC Family of Small Businesses. We’re going to help people in our local communities realize the dream of owning a successful small business by providing them with the skills and training they need. At the moment this project is in the design stage, and we hope to formerly announce it sometime next year. We’re looking for the right people and organizations to help jumpstart a new program that will generate jobs for the local community.    

We’re also going to offer the homes and the businesses closest to our University Park campus access to high-speed wireless internet service. The great thing is that our neighborhoods will have the same access enjoyed by USC students, staff, and faculty. And we are not going to charge for this service—we’re going to offer it to our neighbors for free.    

While I’m on the subject of our local neighborhoods, I want to talk briefly about the Los Angeles Memorial Coliseum. In May the Coliseum Commission voted to approve a new lease agreement under which the university will manage the day-to-day operations of the historic stadium. Although there are still aspects of this agreement that we must work out with the state directly, we are excited about the potential of this new lease for our local community. It will take at least $70 million to restore the Coliseum to its former glory, but we intend to do just that. Honestly, I don’t know when our negotiations with the state will be concluded. It will take some time, and I’m sure you can appreciate the fact that I cannot commit the university to a 50 or 100-year master lease without the university having sufficient control over parking at the Coliseum. That’s the negotiation with the state. We plan to make it a lasting asset; not just for use by our university. After all, we only play six times a year there, but we want this to be an asset for the community throughout Southern California.    

At USC we believe that this century’s most important intellectual horizons will be healthcare and the life sciences. These areas are going to be some of the fastest growing areas of the global economy. That’s why in April of 2009 we purchased the USC University Hospital and the USC Norris Comprehensive Cancer Center from Tenet Healthcare Corporation. For the first time since our founding in 1880, our university has full fiduciary control over all aspects of medicine at USC, not only teaching and research but also patient care. Along with the LA County + USC Medical Center, which is the largest public hospital in this county, our hospitals help us improve the quality of life for our local communities. They help ensure that the faculty of the Keck School of Medicine of USC has more than one million patient visits every year on our health sciences campus. We project that within the next five to seven years there will be at least two million patient visits on the Health Sciences Campus. This is the growth that we’re planning.    

We have a beautification project that is ongoing for the Health Sciences Campus, and we’re going to make it look as beautiful as the University Park campus. We’ve been planting a lot of trees, and there is a lot of landscape activity. We’re in the process of building student housing—more than 450 beds on the Health Sciences Campus for our medical school students, our PhD students, and our residents. We’ve been in negotiations with the Hyatt to build a hotel on the Health Sciences Campus.    

This past February we celebrated an additional $150 million gift from the Keck Foundation, thanks to all of our civic leaders, Mr. Robert Day, and his board of directors. In recognition of this generous donation, our medical enterprise will be known in perpetuity as Keck Medicine of USC. This new name unifies our entire medical enterprise and signifies our vision to create an academic medical center that is worthy of this region, that is responsive to the needs of all of our citizens, and that improves the quality of life for every one of us.    

Strong support from organizations like the Keck Foundation helps us attract more research funding and increase the chances of groundbreaking discoveries throughout the university. One of our most exciting recent hires is Dr. Andrew McMahon from Harvard University. Beginning July 1st, he will be the head of the Broad Center for Regenerative Medicine and Stem Cell Research at USC. He is moving to USC with his entire laboratory of 20 people. .    

In addition to Dr. McMahon, we felt we needed and inspiring new leader for our entire clinical enterprise, so we recruited Mr. Tom Jakovich, the former CEO of the UC San Diego health system, to become our very first Senior Vice President and Chief Executive Officer of USC Health. He is completing work on a strategic plan that will help us grow our patient care activities.    

Part of the plan includes expanding the many services that we already offer. Over the last two years we have opened clinical care satellite locations in strategic areas such as La Canada, Pasadena, and Beverly Hills.     

Last September we announced the most ambitious fundraising campaign in the history of American higher education. For the next several years we plan to raise a total of $6 billion. A lot of this money will be for our endowment, to endow in perpetuity student scholarships, faculty excellence, and the overall laboratory and clinical infrastructures. As already pointed out, during my first year as president, USC raised more than one billion dollars. We are the very first university to cross that marginal barrier in one year’s time. Even more impressive is that we were able to do that in the current economic environment. We expect by the end of this summer to be close to $1.8 billion raised.    

I want to conclude today with some thoughts about how USC and the LAEDC can work together in the future. Over the next 10-15 years, the world will evolve into about 25 major urban centers. While these areas will be located in different regions, they will become the nerve centers of global commerce, communication, business, politics, and education. Recently the McKinsey Global Institute ranked what it believes will be the top 25 urban areas by 2025. Los Angeles is near the top of the list in several categories. If we are to become an urban center for the entire world, we must all join together—universities, corporations, and the leadership of this city and county. We must work together in a spirit of cooperation, helping each other achieve our goals. It is up to us to reimagine what Los Angeles can become; it is up to us to develop the ideas that shape the future; it is up to us to transform this region’s destiny. Together, USC and the LAEDC will continue to advance and promote this city, this county, and this region.    

Let me tell you one more thing in closing. When USC was founded in 1880, this region was a very small, dusty village in the American Wild West. Most of the action was in the Northeast part of the United States and Europe, and the world was very Euro-centric. But already the emphasis is shifting to the Pacific; the world is becoming more and more Pacific centric. Finally our geographic location works to our advantage. Together we will ensure that Southern California will remain a destination for people around the world.