A lack of a contract with the Los Angeles Cultural Affairs Department has led the Valley Cultural Center to pull out of operating the Madrid Theatre as of the end of January. A new contract has never been offered to the not-for-profit organization to continue operating the 450-seat theater in Canoga Park and it didn’t feel it had a legal position to continue occupying the building, said VCC CEO and President Jim Kinsey. “It was a business decision made by the board of directors with my advice,” Kinsey said. “The situation had just gone on too long and it was time to make a smart business decision and bow out.” The VCC will operate the theater until Jan. 31, 2007, when the city will take over until a new operator is found. The center is assisting to make sure there is a seamless transition, Kinsey said. The VCC will continue to operate the theater for shows already booked, Kinsey said. Other advanced booked shows will have to re-contract with the city, he added. The Madrid Theatre, originally an adult movie house, was redeveloped after it was damaged in the 1994 Northridge earthquake. The Los Angeles Community Redevelopment Agency oversaw the development with a $3.3 million federal grant raised by the city. The VCC began operating the theater in 2003. “We’re very happy with what we accomplished there,” Kinsey said. “We’re obviously upset having to make this decision but it’s in the best interests of the organization.”

Voit Development Co. and Selleck Development Group have sold two of five facilities that comprise the final phase of the redevelopment of the former GM facility in Panorama City. The developers of The Plant, a mixed use project that was begun in the late 1990s, have closed on one, 200,000-square-foot building that was sold to Zodax and a 220,000 square foot property that was sold to Living Spaces Furniture. The sale of a third property to Veratex is expected to close shortly as is a fourth, smaller property. The fifth building will be leased. The latest sales mark the completion of what has been considered one of the most successful redevelopment projects in the Valley and one that has been largely credited with helping to revitalize Panorama City. The first phase included an industrial complex and a retail shopping center. In all, The Plant comprises 1.75 million square feet of space on 26 acres of land. Living Spaces, which has two stores in Rancho Cucamonga and La Mirada, will be opening its first San Fernando Valley store with the move. The showroom will occupy about 103,000 square feet with another 72,000 feet dedicated to warehouse space. Living Spaces business model offers customers the opportunity to select furniture for immediate delivery. The store also distinguishes itself with a concept it calls “shoppertainment.” Customers are invited to peruse the offerings while sipping coffee or soda. There is a big screen TV with recliners for those who want to take a break from shopping, and the retailer provides a kid’s room equipped with books, movies and videogames. Zodax, a distributor of home accessories, and Veratex, a linens maker, both were among the earliest purchasers of properties at The Plant. The newest acquisitions comprise additional space for the companies. The property, at Van Nuys Boulevard and Arminta Street, had been the site of a General Motors assembly facility that went dormant in the 1980s. Workers at the GM plant had once built the Panorama City area into a thriving suburb, but with the discontinuation of the operation, the area languished. GM initially sold a large portion of the property but retained the portion that comprised the second phase, including the 220,000 square foot building acquired by Living Spaces. Living Spaces will demolish a part of that property to renovate the space in a way better suited to its needs. Calls to the company were not returned at presstime. Neither Voit nor Selleck would comment on the price paid for the buildings. Brokers familiar with the area estimated that the Zodax property sold for somewhat less than $20 million. The Living Spaces property was listed at $24.2 million prior to the sale. David Hoffberg and Jerry Scullin, brokers with Delphi Business Properties, represented Zodax in the deal. Neither was available to comment for this story. John DeGrinis, Brent Weirick and Patrick Duross, brokers with Colliers International, represented the developers and Living Spaces. The team is also marketing the remaining building, a 17,000 square foot property that Selleck Development will offer for lease. They were not available for comment at presstime.

The enthusiasm consumers showed on Black Friday waned in the week following the traditional start to the holiday shopping season. Although chain store sales rose 3.1 percent for the week ended Dec. 2 compared to the year ago period, chain stores saw a 2.6 percent drop in sales compared to the prior week, according to data compiled by International Council of Shopping Centers Inc. and UBS Securities. “Through this past Sunday, consumers shopped less and completed less of their total expected holiday spending than even last year,” said Michael Niemira, chief economist for the ICSC. The national data would seem to indicate that shoppers might be holding out for bargains.

As expected, the number of personal and business bankruptcies has fallen off considerably compared to last year, the result of new regulations. For the first nine months of the year, bankruptcies fell by 68.5 percent to 443,750 from 1.41 million for the same period a year ago, according to data released by the Administrative Office of the U.S. Courts. Personal bankruptcies fell by 69 percent and business bankruptcies declined by 45.9 percent for the same period. The Bankruptcy Abuse Protection and Consumer Protection Act of 2005, which went into effect in October, 2005, limited the protection offered by bankruptcy filings by requiring debtors to repay at least some of their debt and shifted the types of cases filed to consumer Chap. 13 filings instead of Chap. 7 filings.

California State University Northridge ranked second place among U.S. master’s level institutions with the most number of foreign students in a recent study of 40 college campuses. Open Doors 2006, a survey by the Institute of International Education, found that CSUN had 1,693 international students, second only to San Francisco State University, during the 2005-2006 academic year. Last year, CSUN ranked sixth on the report, with 1,343 students. This year, 87 countries are represented in CSUN’s student body, with the most hailing from Japan, South Korea, India and Taiwan.

The Los Angeles Board of Airport Commissioners on Monday approved changing the name of Palmdale Airport to LA/Palmdale Regional Airport. Palmdale Mayor Jim Ledford called it a minor change but one with a maximum impact. “Adding LA to the Palmdale airport conveys locally that there is a larger regional system for air transportation, better identifies the size of the Los Angeles region, and creates better linkage between Palmdale and the Los Angeles basin,” Ledford said in a statement. The airport is located on 60 acres of land in the northeast part of the city and features a 9,000-square foot facility capable of handling up to 300,000 passengers annually. The city has had little luck in attracting an airline to provide passenger service out of Palmdale. The last attempt by Scenic Airways lasted just over a year. In November, the LAWA board issued a request for proposal to start air service starting in 2007. The request invites all U.S. commercial airlines providing scheduled service to submit a proposal outlining possible service. Proposals will address aircraft type, number of daily departures, destination hub, connecting market opportunities, and marketing and promotion strategies. LAWA, the city of Palmdale and Los Angeles County have also pooled money to fund a $2.05 million revenue guarantee agreement to mitigate the business risk an airline faces in entering a new, unproven market. The project has also received a $900,000 federal grant. Palmdale, LAWA and other partners are also providing $2.56 million in contributions, including terminal rent abatements, advertising, marketing, promotional support and staff time.

The Santa Clarita City Council will provide local auto dealers $60,000 to promote advertisements to purchase vehicles locally. The Santa Clarita Valley Automobile Dealers Association will use the funds on its “Shop Local” campaign. Since the program started in April 2001, the city has contributed $140,000 to the program. In calendar year 2005, new motor vehicle sales represented 22.9 percent of the city’s annual sales tax revenues, or about $6 million.

In the midst of the Congressional debate over immigration reform, the federal government has announced its intention to crack down on employers who hire illegal aliens bad news for countless numbers of California employers. There is, however, a safe harbor for employers who understand the details of new Department of Homeland Security regulations proposed last summer. It has been illegal for companies to knowingly hire or continue employing undocumented workers since President Ronald Reagan signed the Immigration Reform and Control Act of 1986. Due to lax enforcement, employers were lulled into believing that it was okay to employ illegal aliens. As a consequence, the number of California companies employing illegal aliens has grown considerably, and it’s a good bet that most of them don’t know the legal pitfalls for doing so. Under the guise of new Homeland Security regulations proposed this summer, these employers will soon face a serious risk of civil fines, not to mention possible jail time, if they don’t step carefully. How can employers avoid the pain? The process starts when they receive what the Social Security Administration calls a “no match” letter. Under immigration law, employers must record the Social Security numbers of their employees and submit them to the Social Security Administration to see whether they match up with numbers actually on record. As the term implies, a “no match” letter brings news that a number submitted by the employee does not match official Social Security records. For two decades, many California employers ignored “no match” letters with impunity, but that will end under the new regulations unless they follow specific procedures. For starters, employers can’t avoid trouble altogether if they adopt “citizens only” hiring policies or if they restrict hiring to immigrants who hold “green cards.” Not all immigrants who are authorized to work in the U.S. get green cards, and it is against anti-discrimination provisions in the immigration law to restrict hiring to U.S. citizens except when required by federal, state or local law, or by government contract. Nor can employers simply fire any worker named in a “no match” letter. Instead, employers must make a good-faith effort to determine whether the worker is here legally, starting with a check of the employer’s own records to see whether the error is due to a typographical error in recording the worker’s Social Security number. Fixing the problem Assuming the employer finds no such error, the employer must instruct the worker to go to a Social Security Administration office in an effort to clear up the problem. The new regulations give employers only 60 days to clear up any problem, and they must set up “tickler” systems to make sure that no one falls through the cracks. Once the 60 days passes, if the employee can’t present documents legitimating his or her presence in this country, the worker must be let go. On the other hand, if the employee does present new documents, the employer must complete a new Form I-9 verifying the employee’s work authorization and submit it to the Department of Homeland Security. There are some additional punctilios in the new regulations. A worker may not base a new Form I-9 on the same documents questioned in the original “no match” letter, and a mere receipt showing that the worker has applied for new documentation will not suffice. In addition, any document used to establish a worker’s identity — or the worker’s identity and employment eligibility — must bear a photograph of the individual, and employers must retain any new Form I-9, along with any old form I-9, for at least three years from the date of the former, or for at one year after the worker leaves the job, if later. The proposed regulations offer employers a safe harbor if they follow these guidelines upon receipt of the no-match letter from Social Security. Otherwise, the government will assume that the employer who fails to follow these procedures had constructive knowledge that the employee in question was working illegally all the time. Company fines That, in government parlance, will constitute “willful indifference” to the law, and the consequences will not be pleasant. For example, if an employer fails to follow the “I-9 process” outlined above to establish a worker’s legal status, the civil penalties can reach $1,100 for each violation. For employers who fail to follow the safe harbor provisions of the new regulations, civil penalties can reach $2,200 for each unauthorized employee for the first offense, $5,500 for each unauthorized employee for a second offense, and $11,000 for each unauthorized employee for a third offense. In addition, if the government finds that the employer has engaged in a pattern or practice of such violations, it can seek a temporary or even a permanent injunction against the employer. Finally, should the government seek criminal sanctions, penalties start at $3,000 for each unauthorized worker or six months in jail, or both. Clearly, these sanctions can quickly reach ruinous levels, leaving them no choice but to step carefully when hiring new workers and, to be sure, when verifying the status of any “no match” people already on the payroll. Though it has been against the law since 1987 to hire illegal aliens, government estimates show a nearly 5000% increase in the number of foreign born workers in the U.S. working illegally. As Congress debates the larger immigration issue, Homeland Security promises a crackdown on employers who violate the law. For some, this will mean a difficult choice: continuing to violate the law or face losing a significant number of qualified employees. Richard S. Rosenberg is a founding partner of the Universal City labor and employment law firm of Ballard Rosenberg Golper and Savitt, LLP. He may be reached at (818) 508-3700 or [email protected].

Let’s take a helicopter ride above the San Fernando Valley literally and figuratively so that we get a broad sense of what our Valley looks like economically. What industry clusters do we have here? Knowing our geography may be essential to fixing a troubled part of our area, the North Valley. According to Bob Scott, Valley business activist and key player in the Economic Alliance of the San Fernando Valley, there is a way of helping the North Valley by taking a look at where it is located and going from there. Scott is involved in a study by the Alliance-affiliated Mulholland Institute on the future of the Valley. The institute is now looking at industry and commerce in the area, specifically the “I-5 Corridor” that goes through the North Valley. Other business community and public officials should also actively get involved in the discussion of how to get the North Valley, a place of disjointed strip malls and small industries, to become a stronger economic engine for the whole region Look at the Valley from high up and you’ll see a natural geographic connection if you start at Glendale and go up Interstate 5 through Burbank into the North Valley communities of Pacoima and Sylmar and on through Santa Clarita. But there’s something wrong with the whole scenario. The North Valley area sticks out like a sore thumb as totally not living up to its potential. You’ve got the remade cities of Glendale and Burbank, world-class communities now with several significant companies from several different industries (see Mark Madler’s Yahoo story on Page 1 of this issue). But the North Valley area, although it does have some significant industry, still lacks a cohesive quality that makes it a major player in the economy of the region. So how do we change this? As Scott suggests, and I agree, perhaps certain industry clusters should be identified ones that have some relation to the Burbank-Glendale areas or Santa Clarita and that could be nurtured as well in the North Valley so that the whole I-5 Corridor area becomes better connected and stronger. I suggest entertainment should be looked at closely. Burbank, Glendale and Santa Clarita all are powerhouses in this arena whether it be by housing studios themselves or by nurturing certain ancillary businesses or post production houses. These are also crucial businesses for communities in the East Valley such as North Hollywood. Why not nurture them also in the North Valley? Or perhaps aerospace, a smaller industry than it once was but still important to the area, should be the industry to be re-nurtured along the I-5 Corridor. There are still many small aerospace subcontractors there. Let me know your thoughts and let’s get some serious and constructive discussion going on about the future of this area of the Valley. Business Journal Editor Jason Schaff can be reached at (818) 316-3125 or at [email protected] .

Shoppers in Grand Junction, Colo., Springfield, Ill., and suburban Santa Fe this holiday season have a new gift option for a favorite caffeine addict one all the way from the Santa Clarita Valley. Newhall Coffee Micro Roasting Co., the family-run bean maker that grew out of a Newhall coffee shop, has inked an agreement to sell its new holiday-themed coffee package at nearly 400 Stater Bros., Ralphs, Sam’s Club and Costco Wholesale stores in Colorado, Florida, Washington, North Carolina, Arizona and California. The products, which first hit shelves after Halloween, have already been a success, said Mitch McMullen, a company founder. “It’s really turning out well,” he said. “It hit us overnight.” The idea for the special coffee package, which includes caramel vanilla, peppermint mocha and pumpkin spice, started earlier this fall when Newhall was approached by officials from Costco, McMullen said. “They wanted us to put together a holiday gift pack,” he said. The deal fell apart, but McMullen decided to take the product to Sam’s Club, which snapped up the product. It agreed to place it in several North L.A. County stores to gauge the market. McMullen said sales were solid and the company lined up more distributors and clients. “It was highly visible,” he said. “It worked.” Swift growth McMullen and his brother, Kyle, founded the company in 1995 as an outgrowth of a coffee shop they owned in Newhall. The small operation eventually added a catering element, providing coffee to a small batch of clients. Over the years, the distribution has added ever-bigger clients, with a list today that includes the likes of DreamWorks SKG, Warner Bros. and Princess Cruises. Newhall Coffee is also sold to the public at Gelson’s, Smart & Final and Pavilions stores and at Wal-Mart locations in Palmdale and Santa Clarita. The rapid success provided the company with enough funds to expand quickly, jumping on trends, such as theme blends, McMullen said. They created new flavors, such as a “Patriot Blend,” 1,000 pounds of which they shipped to troops in Iraq in 2003. The company is already working on special themes for Valentine’s Day and St. Patrick’s Day. Adding holiday-themed blends is a common business practice for small roasters wanting to diversify their product line, said Mike Ferguson, a spokesman for Long Beach-based Specialty Coffee Association of America. “Christmas blends have been a while,” he said. “They usually have a breakfast blend and they usually have a Christmas blend. It’s tradition.” For McMullen, the quick expansion also shows the benefits of being a small, agile company, he said. “We can react to the market conditions,” McMullen said. “We’ve stepped it up.”