Valley

Valley/34″/dt1st/mike2nd By CHRISTOPHER WOODARD Staff Reporter California’s economy is expected to cool somewhat this year, with job growth slowing from better than 3 percent to about 2 percent. L.A. County’s economy also is expected to slow down, with job growth dipping to 1.6 percent from 2.4 percent last year. OK, but what does that mean for the San Fernando Valley? Will it mean boom or bust for Valley businesses this year? The truth is, no one really knows. Despite the fact that the greater Valley has 1.6 million residents and 600,000 private-sector jobs big enough to qualify as the sixth-largest city in the nation don’t expect any of the economic outlook studies to highlight the Valley. Fact is, no one actively tracks many of the region’s key economic indicators. Or if they do, the information is often incomplete, out of date or not broken down specifically for the Valley. While the problem may seem a bit arcane, the lack of solid economic data is a source of significant aggravation for business leaders and economists. Without a good reading of the economic climate, it’s difficult to say when an individual business or entire industry might need to change course, officials agree. “We’re blindfolded in terms of knowing where we are and where we need to go,” said Bob Scott, a Los Angeles city planner and vice chairman of the Economic Alliance of the San Fernando Valley. “When you can’t see where you are, and you can’t quantify yourself, it’s a little difficult to determine what your action plan ought to be.” Scott sees the problem as a symptom of Los Angeles’ indifference to the Valley, a perception that many agree is driving a push by the area to secede from Los Angeles. “The Valley is treated something like a colony. I don’t think it has full status within Los Angeles,” said Scott. “We’re like the tail end of the elephant. We have a very large and important demographic area, but it’s not broken out by anyone.” Jack Kyser, chief economist with the Los Angeles Economic Development Corp., says the lack of good Valley data is a systemic problem that has to do with the way the information is collected and managed in the United States. It’s a problem that affects not only the Valley, but all of the smaller geographic areas within Los Angeles, be it downtown or East L.A. “The economic data system in the U.S. is not state of the art. The lower you go as you move from the U.S., to the state level, to the city level the more woebegone it gets,” he said. Kyser said the state Employment Development Department’s monthly employment statistics are a good example of the state’s rickety data-collection system. The department’s figures are based on a statistical sampling of companies in California, but the survey is prone to discrepancies in many sectors. The figures exclude the self-employed, and the archaic classification system the state and federal government have used since the 1920s, called standard industrial classification codes, doesn’t even recognize next-generation industries like new media, he said. “It gets to be very, very frustrating. The data (in many areas) is hard to access, and it has a lot of specific twists you have to be aware of. It’s just very poor,” said Kyser. Employment information is just one item on the list of hard-to-get or incomplete data. The state Board of Equalization tracks sales-tax revenue for the entire city, but doesn’t provide a breakout for the Valley or any other sub-region of the city. The Los Angeles Building and Safety Department does a good job tracking building permits, said Kyser, but no longer provides breakouts for the Valley or other areas of L.A. because of cost constraints. The U.S. Census Bureau tracks personal income, but the data is only collected every 10 years and the last complete snapshot was taken nearly a decade ago. The Los Angeles City Housing Department calculates apartment vacancy rates, but the system, which is based on electricity shut-offs and account transfers, is full of flaws. For instance, many larger apartment complexes can’t be tracked because they have master meters that don’t show individual accounts. Real estate brokers track office and industrial vacancy rates, but economists complain that those numbers are often inconsistent because the firms use different reporting methods, said Kyser. But when it comes to studying the economic vitality of a region, it’s job growth that is usually seen as the single most important criterion. And that brings us back to the state Economic Development Department. The EDD carefully tracks unemployment insurance claims and can break down employment data by industry within specific zip codes, but John Rooney, president of the Valley Economic Development Center, complains that he and others have had difficulty getting the EDD to release its specific data because the department considers it proprietary. That kind of information is key to helping business and government leaders chart the Valley’s course, Rooney said. “It relates to economic strategy, understanding what we have and creating a more vibrant economy.” Phil Hardiman, who heads the labor-market information division that collects the data for the EDD, confirmed that his division does indeed withhold employment data in cases where it might be used to identify a certain employer in a small geographic area. For instance, if there’s only one entertainment company in a certain zip code, it would be a simple task for competitors to glean useful intelligence by using EDD figures. The bigger problem with using zip codes to glean employment data is that the information is not always accurate, Hardiman said. That’s because the zip code the state plugs into its spread sheets comes from the company’s listed mailing address. Often, a firm will use the address of its accounting firm for reporting purposes, thus skewing the results of a breakdown by zip code, he said. Hardiman said convincing the Legislature to change reporting requirements, possibly igniting opposition from the business community, would be a tall order. Such a change in reporting requirements might also require the EDD to incur substantial costs, in additional staff time and computer modifications. Rep. Brad Sherman, D-Woodland Hills, a former member of the state Franchise Tax Board, said the problem boils down to “a lack of enthusiasm for doing the extra work, both by government and by business. Sherman said the state Franchise Tax Board, for instance, requires businesses to report retail sales in each jurisdiction in which they have stores, but they are not required to distinguish between sales in different parts of Los Angeles. As a result, smaller cities like Burbank and Glendale can obtain reliable data on sales-tax generation, but areas like the Valley aren’t broken out. To provide ongoing tracking of areas within L.A. would require a change in the reporting laws, mandating that businesses provide a more complete breakdown of sales in each area of the city. “For the slightest added burden, we would have some great figures,” said Sherman. Out of a sense of frustration, Scott last year began spearheading an effort by the Economic Alliance to gather data on economic and social trends in the greater San Fernando Valley. The Valley Information Project is expected to report its findings to the alliance some time in the first quarter. The alliance will then act as a clearinghouse for the information, using it primarily to help market the Valley to companies considering relocating there. Meanwhile, Cal State Northridge, through its College of Business Administration and Economics, has set up its own San Fernando Valley Economic Research Center to catalog and track economic, social and demographic trends in the Valley. Shirley Svorny, director of the center, said she would like to expand the center’s role to include economic forecasts as well, but she is reluctant to do so in part due to the lack of reliable data, especially employment data. Scott said that while the alliance’s information project and CSUN research center help fill the gaps, the information void won’t be plugged entirely until government agencies become more forthcoming with data. Scott said his complaints about the government withholding information may seem “paranoid,” but it’s a problem Valley business leaders have been grappling with for decades. As proof, he keeps on hand a copy of a March 15, 1962 newspaper article in which business leaders call for a breakout of sales-tax revenue to determine if the Valley could be a stand-alone city. “Knowledge is power, and if you give knowledge away you’re giving up power,” said Scott.