May 4, 2004 - From the July, 2003 issue

VICA's Fred Gaines Reflects On San Fernando Valley's Governance Concerns & Economic Prospects

VICA's Fred Gaines Reflects On San Fernando Valley's Governance Concerns & Economic ProspectsThe Valley Industry and Commerce Association's aggressive support for Valley secession last year put the organization at risk of losing legitimacy in the post-secession environment. However, VICA emerged from the battle as a leading voice for business interests in the Valley and throughout the city. MIR is pleased to present this interview with Fred Gaines, in which he reflects on VICA's accomplishments during his two-year tenure as Chairman.

Fred Gaines

Give our readers a sense of the mission and agenda of VICA during your term.

When I became Chairman of VICA, we laid out four campaign issues on which to focus during my two-year term. These included reform of Los Angeles City Gross Receipts Business Tax, permit and regulatory streamlining in business and planning permitting, and what we call "fair share" of state and federal subventions. One of the things that came out of the secession campaign was that the City of L.A. was not getting its fair share of state and federal subventions for education or transportation, let alone the Valley getting its fair share of what the City got. We also are concerned about governance issues. After secession, we are looking at governance in terms of a borough system, the Mayor's proposed Teamwork L.A. Plan, and implementing more local control.

Let's go back through those in reverse order. On the governance issues, the Valley now has five distinct council districts within its boundaries and a few others touch it. There are some experienced members in the newly elected city council. Do we still need reform? What kind of governance reform do we need to realize the potential that exists in the way of representation?

The entire City still needs reform, although we have seen some improvement. We are supportive of the Mayor's efforts on Teamwork L.A. We think dividing the city into seven areas and having City Halls in those areas is important. Now, we need the rest of city government to follow that kind of a format. We need to break down these large bureaucracies into workable areas. The way we see it, the Mayor's efforts at making these changes are a direct result of issues raised during the secession campaign.

We are both hopeful and concerned about the system of neighborhood councils. On the one hand, we now have some balance on neighborhood councils. It's not strictly a homeowners group or a NIMBY group, but it has representatives of business and other groups. On the other hand, to this day it's still sort of a free for all, with neighborhood councils not up to speed on planning laws and rules. You may recall, VICA's initial support was for what was called the "Fleming Plan," which called for elected councils-mini-City Councils-in each of the fifteen Council districts and city councilmembers becoming little mayors of the fifteen Council districts. This plan consisted of neighborhood councils that had authority, were given budgets and the right to set priorities for how these budgets would be allocated in their neighborhood.

Also, we still believe that LAUSD is too big and needs to be broken up. We believe that the entire city agrees with us and it's only a matter of time before that issue gets raised again. The Valley is surrounded by smaller school districts that just do a much better job.

Let's talk about fair share of resources. Elaborate on that issue.

In some respects, for the Valley over the last couple of years, it's been the case that the squeaky wheel has gotten the grease. Up to the secession campaign, and up until this major budget crisis in which no one's getting much of anything, we were doing a little better. We put together a Strike Force on Transportation and were showing up at all the meetings of the State Transportation Commission and MTA. As a result, we were starting to see some improvements made on the 405/101 interchange and in moving up the scheduling of Valley projects. In the short run, things have been good.

In the long run, we've been paying a half-cent sales tax for thirty years because we were promised a subway. Now, after everything is said and done, we're only going to get a busway connecting the length of the Valley to the Red Line. So, we're making some progress because we've been very loud and clear about the lack of fair allocation of resources.

In terms of the State, it's going to be very difficult to make a lot of progress.

VICA was actually in Washington D.C. several times this spring because we believe there's a greater possibility of getting some funds out of Washington on transit related projects than there is locally. Our busway project actually has been very attractive nationally because it's a much more cost-efficient project than the hard-rail projects the Feds have been funding for many years.

What is VICA's position on the LAX expansion proposal?

We supported the larger expansion plans proposed by Mayor Riordan. Mayor Hahn's current proposal is something that we find unacceptable. To lock in LAX and not allow for growth, and to have no plan for expansion or growth elsewhere doesn't make any sense. The Hahn proposal seems to be a $9 billion plan to create the most inconvenient airport in the entire country. The idea that you're going to go to this area outside of LAX for check-in, somehow be processed and then go to the inner area is completely inefficient. We're going to be travelling more on the ground to get to the flight than we are on the vast majority of the flights that are taken out of LAX-it just doesn't make sense. We think LAX is an asset that we've all paid for and that needs to continue to be an important gateway to commerce and a job and economic development creator for the City.

One of the important points for VICA is that we also think there has to be expansion at Burbank and in Van Nuys. We're not saying, "Grow in Westchester and stop the flights in the Valley." All areas of the City that have airports-and the Valley has two busy airports-need to undergo appropriate expansion to accommodate growth.

Talk about the new City Council, its five Valley districts, its new members, and your hopes, concerns, and expectations?

We have some very experienced people and we're very excited to work with them. One of the things we're most excited about – and I think this has been a result of VICA taking a leadership role-is that virtually all of the candidates have talked about the need to reform the L.A. City Business Tax and make this City more business friendly. This is something that five or ten years ago was not at the top of anyone's agenda. Today, everyone is talking about it.


We are concerned, however, about some of the initiatives that the new Council has talked about-in terms of the inclusionary housing ordinance, restrictions on big box retail and the living wage. Those types of ordinances, if passed without other kinds of reforms, can add additional burdens onto businesses in Los Angeles. If we do that without having other things in place-like business tax reform-we only add more reasons for businesses not to come to Los Angeles, or to leave Los Angeles.

You're also involved, as is VICA, as a board member of the Valley Economic Alliance. Describe its mission and why VICA is involved. Tell us a bit about its agenda over the next year, including housing and other economic strategies, in which it is engaged.

The Economic Alliance was put together to be a think tank and sounding board for economic issues in the San Fernando Valley, as well as a vehicle to promote the Valley. VICA, the United Chambers of Commerce, the Southland Regional Association of Realtors, and other groups helped put the Economic Alliance together. We wanted to make sure that we were looking in an academic and comprehensive way at important issues in the Valley, including housing, trade, and transportation. The Alliance has been very successful in holding a series of conferences on these issues, in bringing together leaders from all over the country to talk about these issues, and in producing studies. It's hard for us to think of it now, but three years before the secession campaign, we didn't even have a statistical base from which to evaluate the Valley's economy. Part of that collection of data has come from the Economic Alliance.

I know you have a conference on housing this month (July), and as a lawyer, you've got extensive experience with housing. What's the challenge here? We know that two Chicagos are coming to the basin, yet we're only producing, at best, 5,000-6,000 units a year in Los Angeles. What's the obstacle and who are the leaders that pull together the campaigns that lead to a win-win situation between neighborhoods and housing developers so that there is enough housing to accommodate the growth we are expecting?

There has to be the political leadership to step forward and say that we are going to be living in higher density in the City of Los Angeles in years to come. It goes hand in hand with business development and job creation. People want to live near where they work. We clearly are not investing in our transportation infrastructure to the extent that we need to be. We want to be able to create jobs and economic development in an area like the San Fernando Valley and have the housing to do so. To do that, we're going to have to have higher density than we have had in the Valley historically.

In your opinion, who has the credibility to give weight to those arguments? The BIA? An individual developer? A councilperson? VICA?

It needs to come from a lot of those places. It certainly has to come from political leadership, from labor leadership, and from business leadership. And, if anyone has been talking about it, it's been the business community. VICA has certainly been out in front on this, and that is the reality of what has to happen. It doesn't work any other way.

Unfortunately, we still have a system in the City of Los Angeles in 2003 where the City can plan for what's needed to accommodate growth and the growing population, but if 20 or 30 people show up at the meeting to complain, the political leadership runs for cover. We just had that happen with the 101 Freeway study. And, we see this when we want to do housing at any kind of increased density as well. It's the same lack of leadership. There has to be leadership from our elected officials and from leaders of other groups.

The public often expresses its frustration by saying, "All of the alternatives really weren't studied. It's incompetence on the part of the public sector that gives us these choices." What leads to that reaction by so much of the public when these issues surface at the end like this? Given all of the effort that goes into these two-year studies and these efforts of collaboration, where is the breakdown in the communications?

I don't think it's a breakdown in communications as much as it is just knowledge of politics. They know that very small groups, especially in local politics today, can have that kind of effect. They know that our city councilmembers and others are responding to loud, but very small, groups. After all, loud, but very small, groups are electing them.

We have polarization of politics to the point where the silent majority is truly large, very silent and goes about its business uninvolved to the point of not voting. If this silent majority were to show up at any of these planning meetings, you could overcome these very loud minority groups.

Lastly, at the end of your second year and your term as VICA chair, how should you be judged? What constitutes success for your two terms as chair?

There are a couple ways to look at it. In terms of substantive issues, we have done a good job throughout the entire City of pressing the need to make Los Angeles more business friendly. From an organizational standpoint, we've continued with good membership and with strong support for our issues throughout the Valley.

On the issue of secession, we came out and took a position in favor of secession. People said, "That'll cost you, you'll never do business in the City again." That hasn't been the case because we did it in a way that was very principled. We laid out the arguments as to why we thought secession could lead to a City that was better for residents and businesses in the San Fernando Valley. Because we made that case and now have followed it into other policy arguments, we have been able to succeed despite the failure of the secession bid to pass.



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