Civic Bread Cast on Water Often Just a Soggy Free Lunch

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.

Time magazine’s recent analysis of corporate welfare found incentives and tax breaks way out of kilter with the jobs they created. Pennsylvania’s $307 million to a Norwegian company to reopen an old shipyard worked out to $323,000 per job. In L.A., big CRA subsidies created far more low-wage retail jobs than livable-wage industrial positions.

The Baldwin Hills Crenshaw Plaza jobs cost $53,725 each, yet paid on average $6.50 an hour for non-managers, so little that the worker would be eligible for public aid like food stamps, thus potentially doubling the tax bite on the taxpayer, front end and back.

But breaks for a Wilmington industrial firm cost only $12,000 for each new job--and those jobs paid a livable $11.20 an hour.

The most enduring criticism in the L.A. study was one that many such programs earn: not being able to track and prove job-creation claims, either by quantity or quality, which means not knowing precisely what they--we--are getting for the money.

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A few years back, the Los Angeles Police Department was being played for a sucker by fledgling cops who went through the LAPD’s free training academy, then took their know-how to other police departments. One did it the day after he graduated.

The LAPD now requires its rookies to pledge a minimum five years of protecting and serving here, or pay back all or part of the $58,600 it costs taxpayers to train them.

Millions of dollars may get away, but thousands, we nail down tight.

A city policy evidently recommends but does not require developers to guarantee repaying city bonds issued on their behalf. When the prospect of public money for a football stadium or the Staples Center arose, I hadn’t seen such a revolt since the leaf-blower law. Finally, one council member made the Staples Center people commit to repaying any city millions if the project were to go under.

Easier for them than us; they can just take it out of the players’ paychecks one week.

Patt Morrison’s column appears Fridays. Her e-mail address is: [email protected]