Valley Briefs Diodes Signs Pact Westlake Village based Diodes Inc., a manufacturer and supplier of discrete semiconductors announced that it has signed a distribution agreement with one of the largest suppliers and distributors of electric components in North America, Mouser Electronics Inc. IRIS Reports Revenue Hike IRIS International, Inc., a manufacturer and marketer of automated IVD urinalysis systems and medical devices used in hospitals and reference clinical laboratories worldwide, announced a 53 percent increase in revenue for the first quarter ended March 31, 2004, and strong profits in what has historically been a seasonally slower quarter for the company. Revenues for the first quarter rose to $9.4 million, compared with $6.1 million in the corresponding quarter of 2003. Net income was $530,000, or $0.04 per diluted share, compared with a net loss of $488,000, or $0.04 per diluted share, in the like period a year ago. Studio City Business Expo The Studio City Chamber of Commerce will once again sponsor a business expo on Friday April 30, from 4 p.m. to 7 p.m. at Osaka University in Studio City. The one-day event is a marketing opportunity for companies to showcase goods and services to other businesses and residents of Studio City and the Valley. The event is free to the public. The fee for vendors is $99. This fee is waived for Chamber members and new members joining the Chamber for 2004. Housing Summit Planned On Thursday, May 6, the Southland Regional Association of Realtors is holding an affordable housing summit at its offices at 7232 Balboa Blvd. in Van Nuys. Registration and a continental breakfast will be served at 8:30 a.m, followed by an hour of presentations from Mercedes Marquez, General Manager of the Los Angeles Housing Department, policy analyst Christian Peralta, and developer Severyn Aszkenazy. Following the presentations, a bus tour will take people on a bus tour of innovative affordable housing developments in the Valley. For more information, contact: (818) 947-2256. VICA Business Advocacy Awards VICA is holding its 4th annual “Excellence in Business Advocacy Awards” and gala on Thursday, June 17. These awards are designed to recognize and celebrate the exceptional companies and VICA volunteers in the greater San Fernando Valley area. These five awards will be presented in a black-tie gala at the Universal Sheraton Hotel. The awards presented will be in five categories: an achievement award for outstanding VICA volunteer advocate, an achievement award for a not-for-profit organization, an achievement award for a small business (50 or fewer employees), an achievement award for a large business (51 or more employees), and an achievement award for outstanding new VICA company. IHOP Attracts Franchisees IHOP Corp. announced that it has signed multi-store development agreements with three franchisees new to the IHOP system to develop 14 new IHOP restaurants over the next four to five years. These commitments represent the first development agreements that IHOP has signed with non-existing franchises as the Glendale-based company works to capture franchise interest outside of the IHOP system. New restaurant development will take place in Colorado, Texas, and Wisconsin. First Commerce Record Earnings In the first quarter of this year, Encino-based First Commerce Bancorp reported net income of $444,000, an increase of 67 percent from the $266,000 in the like period a year ago. Diluted earnings per share were $0.05 for the first quarter, as compared to $0.03 for the same period in 2003. VICA Ready for Return of Football The Valley Industry and Commerce Association Board of Directors overwhelmingly voted to support the Los Angeles Memorial Coliseum as the preferred site for a state of the art stadium that would be home to an NFL team. NFL owners are expected to discuss the topic at their upcoming gathering in Jacksonville, FL next month. Advanced Biotherapy AIDS Study Woodland Hills based Advanced Biotherapy Inc. announced the launch of a phase I FDA-approved clinical trial to initially treat antiretroviral drug-resistant AIDS patients. The trial is being conducted by researchers at Georgetown University. The study’s enrollment at the onset is limited by 10 patients who are in virologic failure and no longer able to benefit from the administration of highly active anti-retroviral therapy. It is estimated that more than 50 percent of AIDS patients ultimately become non-responsive to such drugs during the course of their treatment. Advanced Biotherapy’s plan is to use an inhibitor that targets TNF-alpha, a pro-inflammatory cytokine, that severely disturbs the body’s immune system. The new Phase I study is intended to test the safety and possibly show a clinical effect of this inhibitor aimed at helping to restore normal immune system function in AIDS patients with advanced disease.

Upscale Roy’s Restaurant Plans Woodland Hills Location REAL ESTATE By Shelly Garcia It may not be the biggest real estate story of the year, but it’s likely to stir up just as much excitement. Roy’s restaurant has just inked a deal to open the first of four Los Angeles area eateries in Woodland Hills. Roy’s, a posh and pricey dining spot, is well known both to those who have vacationed in Hawaii and those who follow the celebrity chef circuit. Its founder and chef Roy Yamaguchi, who appears nationally on PBS, has won a mouthful of awards including mention in Conde Nast Traveler’s Top 50 restaurants. He’s also been featured in “My Country, My Kitchen,” a TV Food Network program, and he has published two cookbooks. Yamaguchi actually began his career in Los Angeles, worked at Michael’s in Santa Monica, and for a time in 1984 operated his own restaurant here, 385 North, before opening his first Roy’s in Honolulu in 1988. Roy’s Hawaiian fusion cuisine, featuring such dishes as Hawaiian Style Misoyaki Butterfish (miso seared butterfish with Chinese five spice butter sauce) and Roy’s Classic Roasted Macadamia Nut Mahi Mahi, is now served at 30 restaurants in some 21 states, but the company’s inroads in Southern California so far have been limited to the Orange County, San Diego and Palm Springs areas. Thanks to some additional investment capital from Outback Steakhouse Inc., which has financial partnerships with several restaurants, Roy’s is now expanding in the Los Angeles area. The company inked a deal for about 7,000 square feet at 6355 Topanga Canyon, said Brian Forster of TOLD Partners, who represented the landlords, Topanga & Victory; Partners LP and TOIBB Enterprises. The 10-year lease is valued at $2 million. Roy’s was represented by Irwin Hyman of NAI Capital Commercial. “We think Woodland Hills is a terrific market,” said Mark Running, Roy’s president. “We believe the Valley knows us already. You have a lot of people who do weekends in the desert and have experienced Roy’s there. The demographics are strong in the Valley.” The restaurant will seat about 200 including patio seating. Forster, who is himself a big fan “It’ll be the best thing to hit Woodland Hills,” he said said the company looked both in the Conejo and the West Valley area before deciding on the location.” “They were thinking of going to Conejo Valley,” Forster said. “But people in the Valley don’t want to drive to Westlake Village. People in Westlake Village will drive to the Valley.” Roy’s, which will open late in the third quarter of the year or early in the fourth quarter, is open for dinner only. The tab averages about $45 per person. Company officials said they have been scouring the area for all four locations, and the Woodland Hills deal was the first one to close. They are close to signing a lease in Pasadena and hope to complete deals on the West side (perhaps Beverly Hills or Santa Monica) and South Bay soon. The company is also considering a downtown L.A. location. Vacancies, Rents Down The first quarter real estate market numbers are out, and there’s good news and bad news. The good news is that vacancy rates for greater San Fernando Valley office space are continuing to decline and absorption is back in positive territory. The bad news is landlords are paying a price to keep it that way. Rental rates for the first quarter of the year dipped to an average of $2.02 per square foot, down by a penny or two from the fourth quarter last year, according to the just-released data from Cushman & Wakefield. “The drop in the rates may be a reaction to the weak leasing figures of year-end 2003, as landlords use lower rates in an attempt to attract new tenants and ignite more activity,” the report said. Overall, the region’s vacancy rate was 12.5 percent for the quarter, the report revealed. Conejo Valley continued to be among the toughest submarkets, with Thousand Oaks registering a 13.1 percent vacancy rate with negative absorption 156,320 more square feet were vacated than were leased in the period. In Agoura Hills, where the vacancy rate was 23.5 percent, absorption remained in positive territory, just barely, at 14,598 square feet. Among the strongest office markets, Sherman Oaks posted a 9.2 percent vacancy rate with positive absorption of 31,584 square feet. A CB Richard Ellis report also released last week showed the overall vacancy for the greater Valley area at 10.8 percent. CB uses a building count of 232 while Cushman & Wakefield’s report surveys 360. Big Box Deal Developers of the former theater site at Van Nuys Boulevard and Millbank Avenue in Sherman Oaks struck a deal that will put a big box store on the property. Best Buy Co. Inc. will be constructing a 56,000-square-foot store on the property, the former site of AMC Theatres, which closed down last year. The store, which will contain about 45,000 square feet of usable space, will be constructed on two stories, one street level and one below street level, said Ira Handelman, a land use, government and community relations consultant who is working with the developers. Handelman said the project is in full compliance with the Ventura Boulevard Specific Plan, which governs the property, and requires no variances to move forward. The retailer will also build a parking structure, with two levels above ground and one below ground. Meetings have already begun with city officials and the community, which had initially expressed a great deal of concern over the idea of a big box development. Handelman said he expects to win the community’s support. “We designed the project to respect the Sherman Oaks community and to do that we set out to comply completely with the Ventura Boulevard Specific Plan,” he said. Senior reporter Shelly Garcia can be reached at (818) 316-3123 or by e-mail at [email protected].

Product Backlog To See Porn Firms Through Hiatus By SLAV KANDYBA Staff Reporter Although an HIV scare has prompted a two-month filming stoppage in the adult entertainment industry, production company officials in the San Fernando Valley said their business will not be impacted from the hiatus. They say a backlog of completed filming will keep them busy. “Most of the companies have a backlog of already finished footage,” said Mark Kernes, senior editor of Chatsworth-based Adult Video News, an industry trade magazine. “I don’t think the companies are going to suffer.” That holds true for Madness Pictures, a relative newcomer to the industry, which had its first release scheduled for last week. “We have enough material in the can, so to speak, that we’re not affected by (the two-month moratorium) on production,” said a representative with Madness who asked that his name not be published. “We have enough material to keep working.” Madness plans to release six new films during the two-month time span when the filming stoppage is in effect, the representative said. At Evolution Erotica, a Chatsworth production company, owner Dave Gallegos said a catalog of previous releases and the company’s distribution capacity would ensure his business would be fine during the moratorium. Evolution would also have to adjust its release schedule, so instead of three to four movies per month, “it will be two movies or even one,” Gallegos said. But he said that will not mean the company will take in far less sales revenue. Gallegos said its extensive library of films and distribution arm will see it through. “As far as business goes, we’ll be OK, we’ll just have to release less until we can shoot again,” Gallegos said. Catalogs will help Companies that have a large catalog, including industry leaders Vivid Entertainment and Wicked Pictures, would probably fare the best if the moratorium is extended past June 8, said Patrick Collins, owner and president of Elegant Angel Productions in Chatsworth. Elegant, which has a release schedule of six to eight films per month, has enough backlog to meet its release schedule, Collins said. “A new company doesn’t have the catalog, as a result it won’t have anything to sell,” Collins said. “If we go to condoms-only (films), the catalog for companies that have condomless performances will increase (in value).” Adult Video News’ Kearns said some companies are disobeying the moratorium and continuing to film. The film stoppage was urged by the Adult Industry Medical Health Care Foundation, which tests performers for HIV and other sexually transmitted diseases. Performer Darren James tested positive for HIV after having unprotected sex in Brazil. Lara Roxx, who performed with James subsequently, also tested positive for the disease. Dozens of other performers who worked with James and Roxx were tested and are being monitored. There are about 125 production companies in the San Fernando Valley that are involved in production of hardcore sex films. They release between 3,500 and 4,000 video tapes and DVDs annually, Kernes said. “As soon as the quarantine is over, (production companies) will start shooting again,” Kernes said. “I’m sure that they’ll make the most of their release dates.”

Valley Economic Forecast Set for Release May 25 By SLAV KANDYBA Staff Reporter The second annual San Fernando Valley Economic Forecast, scheduled to be unveiled on the morning of May 25 at the Sheraton Universal Hotel, will be highlighted by a presentation from an economist at the Federal Reserve Bank of San Francisco. Dr. Gary Zimmerman will address national trends in manufacturing and high-tech, while other speakers will talk about the Valley, the county and the state. This year the program is titled “The Recovery: Breakout or More Doldrums?” Daniel Blake, director of the San Fernando Valley Economic Research Center at Cal State Northridge and the organizer of the event, will discuss the Valley, while Mark Schniepp, the director of The California Forecast, is slated to discuss the economic trends in the Los Angeles region and the state. Blake’s center is producing the forecast for the second time after introducing it last year in response to popular demand by businesspeople in the area. The center plans to continue to offer it every spring. Last year, the forecast was largely based on responses to two surveys of local businesses, in addition to comparisons of relationships between the Valley’s business sectors and their counterparts at the county, state and national levels. The surveys asked different-sized businesses about hiring patterns, capital spending and reflections on competition and salary growth and revenue trends. The forecast looked ahead, making projections through 2005. This year’s will go through 2007. Roberto Barragan, president of the Valley Economic Development Center and a co-sponsor of the forecast presentation, said he found last year’s forecast useful. “We find the forecast to be much more on target than any other source,” Barragan said. “We use the results of the proposals on a regular basis.” In the upcoming forecast, Barragan expects to see a report that certain segments of the Valley economy continue to grow and the housing market continues to be robust with increasing prices. “I’m interested to see the advances in entertainment and how banks are doing,” Barragan said.

GE Finance Group to Acquire Mortgage Bank WMC By SHELLY GARCIA Senior Reporter GE Consumer Finance has chosen a Woodland Hills company for its first foray into the domestic home mortgage lending business. The unit of General Electric Co. has agreed to acquire WMC Finance Co., a highly successful subprime mortgage lender, in a move expected to help WMC expand its operation well beyond its current size. Terms of the deal, expected to close in the third quarter, were not disclosed. WMC’s management and headquarters offices will remain in its Woodland Hills location, the companies said. Amy Brandt (photo), WMC’s president, will remain in that position, reporting to the president and CEO of GE Consumer Finance for the Americas. “Clearly, from a capitalized point of view, GE is the most valuable company in the world,” said Mark Walter, executive vice president, credit and operations for WMC. “They bring capital and they’re going to allow us to grow much more aggressively on a nationwide basis than we otherwise would be able to.” (Brandt, who was traveling overseas, was not available to comment.) WMC, the sixth largest nonprime wholesale lender in the country, in 2003 originated $8.2 billion in loans. In 2000 the company completely overhauled its business model, shuttering all of its storefronts and investing in cutting edge technology that allows WMC to conduct its loan transactions over the Internet. The highly risky gambit worked. WMC’s loan volume doubled between 2002 and 2003 and the company has recently opened branches in Dallas and New York, creating a national organization with about 1,300 workers. But despite its substantial strides, WMC executives say they needed more resources than the company was able to generate in order to continue to grow. “What we found was that our online, one location strategy worked very well up to a certain point, but our growth began to stagnate,” said Walter. Growth limited While its offices in Dallas and New York helped open those markets, developing them required establishing close ties with mortgage brokers, and that could only be done with more staff and more local offices. “California brokers expectations differ from Chicago and Chicago differs from New York,” said Walter. “So it’s really a matter of getting more of a geographic focus on the markets.” WMC, which specializes in what the industry refers to as “Alt A” lending, targets a market that, in contrast to the subprime market, does not have bad credit, but may have certain credit issues that exclude them from the prime market. These borrowers may have non-traditional income that is difficult to substantiate or they may have high debt ratios, but they are typically otherwise credit worthy. The market is considered riskier for lenders, but it is also much more profitable than the prime lending market. GE, a powerhouse in consumer lending with some $107 billion in assets globally, had been seeking new markets to augment its business, heavily weighted toward credit card and auto loan financing in the U.S. when it made the deal to acquire WMC. “I think GE’s entry into the mortgage business is not entirely unexpected,” said S.A. Ibrahim, a board director for the California Mortgage Bankers Association. “GE is a major player in consumer finance and this has been an area where they had minimal presence.” GE officials said they looked at several different lenders before choosing WMC, which is owned by Apollo Management LP, a very large investment banking firm based in New York. “We chose WMC because of its solid management team, technology and proven record of success,” said Peter L.Tosches, a spokesman for GE Consumer Finance. While the outlook for home mortgage lending has cooled in recent months on expectations that interest rates will rise, the subprime and nonprime markets are not likely to be affected as dramatically as the prime markets. While refinancing activity, which has driven much of the volume in the prime lending markets, is down dramatically, a number of new products and programs are rolling out to service the home buying market. And much of that effort is directed at home buyers who are WMC’s target market. “Subprime and Alt A borrowers are not as rate sensitive to begin with,” said Ibrahim, “and second, as the market becomes more purchase dominated, there are a lot of people out there who want to buy homes who do not fully meet the prime criteria.” Debt to double The industry projects that the amount of household debt will nearly double by the end of the decade to about $12 trillion, and much of that increase will be driven by new home buyers who have had limited access to loans until now. Public policy has recently been directed at efforts to reduce the gap between white home owners and those of belonging to other ethnic groups, whose rates of ownership are far lower. And companies like Fannie Mae and Freddie Mac are rolling out programs targeted specifically to these borrowers as well as other first time buyers who simply have difficulty meeting down payment requirements. That bodes well for a company like WMC. “New products, particularly on the Alt A and subprime side, are more inclusive of different borrowers and everyone is looking at the Alt A sector to disproportionately benefit,” Ibrahim said. “What GE brings to the table is a lot of muscle and a proven management capability,” said Ibrahim. “But just because they’re GE doesn’t mean they automatically will be successful. They’re going to have to earn their way in.”

Sunrise Finds Place Amid Crowding of Senior Living Field By SHELLY GARCIA Senior Reporter Growing older may be inevitable, but as it turns out, what folks do about it is not a foregone conclusion. The assisted living industry learned that lesson the hard way in recent years as many operators, unable to fill up their residential communities, closed or consolidated. One local operator, Sunrise Senior Living Inc., is among the few that have survived and prospered. This year, even as the closures continue, Sunrise will open three additional facilities in the San Fernando Valley, bringing the total number of its Valley communities to six and adding to an already substantial coffer of more than 370 assisted living centers in 34 states. Sunrise’s ability to prosper, both the company and outsiders say, can be traced to a niche it has carved within the assisted living industry serving residents who are frail and catering to those with dementia, especially Alzheimer’s Disease. In targeting a specific segment of the aging population, Sunrise joins a handful of companies who are staking out markets as diverse as homes dedicated to Chinese Americans and gays and lesbians. “Those that said we have assisted living therefore you should come to our community, they couldn’t fill up,” said Bob Kramer, president of National Investment Center (NIC) for seniors housing and care industries, a research group in Annapolis. “You had to establish your own niche. You had to convince the market why your particular type of assisted living was the one to move into, either by price, types of service or the types of communities they appeal to.” Assisted living centers first emerged on a large scale in the 1990s to fill a gap between traditional nursing homes and independent communities for active seniors. Unlike the “Father Knows Best” family of the 1950s, family constellations for baby boomers had become far more complex, and the me generation had neither the ability nor the resources to care for an aging parent at home. Typically set up with individual bedroom suites, some with kitchenettes, and common living, dining and recreation areas, assisted living centers were viewed as the answer to a burgeoning need for homes where seniors could get the assistance they needed, be it meal preparation or medications, without the cost of 24/7 skilled nursing care that they did not require. Assisted living centers quickly sprouted throughout the country, fueled by banks and other lenders who saw the chance to invest in a lucrative business opportunity. Too many centers As it turned out, the market did not need quite so many centers, and because these homes are all run on private pay MediCal does not reimburse the cost of an assisted living center many operators, especially those with no experience in providing services to the aging, could not compete. “Particularly in the last year, the national median is stuck at about 85 percent occupancy,” said Kramer. “And at about 85 percent, it’s very difficult for a property to provide any return on equity to the owner or investor. At times, it may only be low interest rates allowing the properties to cover its debt service.” As of last year, the top three providers in the industry Sunrise, along with Alterra Healthcare Corp. in Milwaukee and Emeritus Assisted Living, in Seattle, controlled 58 percent of the total capacity of the industry’s top ten providers, according to data from Assisted Living Federation of America (ALFA), up from 51 percent in 2002. Meanwhile, new center construction has fallen precipitously. In 2002, the last year for which figures are available from NIC, construction starts for assisted living centers were down 37 percent compared to the prior year. And NIC officials say there has been further decline this year. “We’ve seen for the last three years very little new construction with a couple of notable exceptions,” said Kramer, “and one is Sunrise.” Sunrise at the end of May will open Sunrise of Studio City and later in the year will open Sunrise of Woodland Hills and Sunrise of Westlake Village. Its existing facilities, in Northridge, Valencia and West Hills, are for all intents and purposes, at full occupancy, and there is a waiting list for the special Alzheimer’s units the company builds into each of its facilities. Sunrise caters to residents that are frail, unlike many other companies that often shunt those folks off to nursing homes. The average age of its residents is 85. “Sunrise from day one has been committed to caring for the frail resident,” said Dale Boyles, area manager of operations for Sunrise. “Others had to struggle. What they were looking for was the 75-year-old widow who was driving and didn’t need those facilities.” Alzheimer’s units Although the company has always accommodated those with dementia, Sunrise about 10 years ago developed special units within the facility for those with advanced dementia and Alzheimer’s. The Reminiscence Centers, so called because they are stocked with items like typewriters, wedding dresses, baby dolls and plastic tool sets to jog memories, are kept secure so that patients cannot wander out. They also require a more highly trained staff because Alzheimer’s patients can exhibit problems like paranoia resulting from their loss of memory. “As Alzheimer’s progresses, judgement and ability to organize thoughts and routine tasks are compromised,” said Rachelle Dardeau, director of regions for Alzheimer’s Association. “Bathing is a huge issue,” she said. “People may not recognize what a bathtub is for and have the feeling that this is a dangerous situation because it is water.” The Reminiscence Centers accommodate about 20 or 25 residents, about 25 percent of the total population of a Sunrise complex, but officials figure that another 20 percent to 25 percent of the residents who live in the general population also suffer from early stages of dementia and Alzheimer’s. Caring for these patients is more costly, primarily due to the higher cost of staffing, but the market is one that’s also likely to assure Sunrise’s continued success and growth. According to the Alzheimer’s Association, 4.5 million Americans currently suffer from Alzheimer’s, double the number in 1980. And by 2050 the Association projects the number of individuals with Alzheimer’s will grow to anywhere from 11.3 million to 16 million. “We know that Alzheimer’s is really a disease of age,” said Ronda Wilkin, area director of community relations for Sunrise. “Since the population is aging and Alzheimer’s is generally a disease of age, we also know that the numbers are going to skyrocket for folks with Alzheimer’s.”

Extent of Tax Reform May Depend on Budget Decisions By SLAV KANDYBA Staff Reporter Although two business tax reform proposals are now in the hands of a committee of the L.A. City Council, the movement to change the system could stall due to the city’s budget problems. While Valley councilmembers Wendy Greuel, Jack Weiss and Tony Cardenas will discuss the proposals among themselves as members of the council ad hoc committee, the full council will have to cobble together a budget before June that is already adversely affected by the state’s difficult financial situation. “We’re going to go through the budget process before entertaining these motions,” said Mike Hernandez, the former city councilmember and now Councilmember Bernard Parks’ deputy, speaking on behalf of Parks at the Business Tax Advisory Committee’s meeting at City Hall on April 12. Parks is chairman of the council’s budget and finance committee. At the meeting, 5-year-old BTAC, a citizen group made up of business leaders from different parts of L.A., unanimously approved a proposal that would cut the city’s business tax by 15 percent over five years, with an additional 15 percent cut on top of that if the city’s budget situation permits. A second proposal, the so-called Greuel-Garcetti Proposal, which was co-sponsored by 13th District Councilmember Eric Garcetti and Greuel and was presented a day after BTAC’s recommendation, seeks to cut taxes faster by 25 percent over five years, with an additional 25 percent if the city is financially stable. Greuel said in an interview with the Business Journal that the city of L.A. must make itself more competitive on the global stage and even against local cities such as Burbank and Calabasas, where no business tax is collected. In addition to cutting the taxes, both the BTAC and Greuel-Garcetti plans call to do away with the current classification system that uses more than 50 categories to determine tax rates. Both favor the same five-category system used by the federal and state governments. Neither proposal will be due for consideration by the full Council until the city budget is discussed, Hernandez said. And then, both proposals will face scrutiny from councilmembers, some of whom may be reluctant to provide businesses with tax relief at a time when the city is getting less money from the state. BTAC Vice President Jack Walker, however, said his committee’s proposal was the more “palatable” of the two because it was less risky, took less revenue away from the city, and would likely face less opposition. “I think the politics would indicate that the councilmembers from the less developed areas would be more skeptical and less risk-taking than those from the Valley,” Walker said. But before there will be any action, the two proposals would have to be discussed and combined. “It will take a while to reconcile these two approaches,” Walker said. With its proposal work behind it, BTAC will meet April 29 to discuss how to improve compliance, or make sure that businesses that evade paying taxes do so. Through compliance, BTAC members including Walker said they believe the city’s loss of $54 million due to business tax cuts could be made up.

First New Grocery Store in 5 Years Planned for Valley By SHELLY GARCIA Senior Reporter A local shopping center that has languished for years could get a makeover with a planned addition of a Pavilions grocery store. Safeway Inc.’s Vons division is planning to build a Pavilions unit at the site, Corbin Village in Tarzana. Although plans are in very early stages, Vons officials have already met with city officials as well as some of the other owners of the shopping center, and they are working through the entitlement process. If the development goes through as planned, the store would be the only new grocery built on the San Fernando Valley floor in about five years. “I met with them right when the strike hit,” said Tom Henry, chief planning deputy to Los Angeles City Councilman Dennis Zine, who represents the area. “They want to put in a Vons Pavilions, so it’ll be a nice grocery store.” The 155,000 square-foot center, built in the 1950s, has an unusual ownership arrangement. Three different entities own different sections of the center, which sits along Ventura Boulevard, making it difficult to launch a remodeling effort. But with the addition of Vons, some of the other owners say they expect to be able to coordinate a facelift for the entire center. “We’ve been wanting to tie the center in and have it look as one,” said Dean Cutler, who represents the owners of a 70,000-square-foot section of the property on the eastern end, Vencor Management Co. LLC. “We think ultimately that having Pavilions will achieve that goal.” The Vencor property is fully occupied, but vacancies at the western end of the center, where Vons is planning its 55,000-square-foot store, along with several short term leases, made investing in a major overhaul risky. “If they come in, it’s obviously a long term plan and the center will probably take on a new, permanent long term look and new long term leases,” said Cutler. Vons began looking at the property several years ago, and finally closed the deal last October. Development roadblocks But there are still several hurdles to jump before any construction gets underway. Chief among them is a 99 Cents Only store that sits on the property. “They’ll have to negotiate some sort of lease termination,” said a broker who was involved in the deal. Officials at 99 Cents Only said they had been aware of Vons’ interest, but had not had any contact with officials of the chain. “We haven’t been approached, and we haven’t’ heard anything,” said Albert Lee, who identified himself as information czar for 99 Cents Only stores. “We have a lease and we plan to stay and do business.” Although city officials welcomed the idea of an upscale grocery store to the neighborhood Henry said the council office as well as neighbors will have to weigh in. “This will definitely go to neighborhood council and will end up at public hearings with the planning department for certain exceptions to the Ventura Boulevard Corridor Plan,” Henry said. The Ventura Boulevard Corridor Plan imposes certain restrictions on building over and above city ordinances. Among their likely concerns is the parking configuration. Although the center has an abundance of parking, where it is located and what kind of access is provided is likely to be a sticking point. “I had concerns with circulation and lack of landscaping,” Henry said. “Not necessarily the number of spaces, but the configuration.” Right now, the parking lot for the center fronts Ventura Boulevard, and communities have recently taken exception to such designs, preferring that parking structures be hidden from view of the street. The last new grocery constructed in the Valley was a Ralphs built in Studio City about five years ago. Vons operates about 10 Vons stores and two Pavilions stores in the area, one in Sherman Oaks and another in West Hills. Store churn Although the major grocery chains in the area are currently working through the financial effects of the United Food and Grocery Workers strike that hobbled grocers for about two months late last year and early this year, the churn of new store openings and closures typical of the way groceries operate has continued. As of January, Vons operated 326 stores in Southern California. Safeway opened 40 new stores in 2003, the most recent period for which figures are available, compared to 75 new stores opened in the prior year. The company closed 31 stores, compared to 40 closures in 2002. The company does not release specific data for its divisions. In its most recent financial reports Safeway estimated that the strike (which was still ongoing at the time) would reduce earnings by about $102.9 million in the fourth quarter of 2003. For the 53 week period in 2003 Safeway reported a net loss of $170 million or $0.38 per diluted share, compared to a net loss of $828 million or $0.27 per share in the prior 52 week period. Revenues in the 2003 period were $35.6 billion, compared to $34.8 billion in the prior, 52-week period. Revenues declined on a comparable store basis for the period by 2.5 percent, Safeway said, compared to a 0.7percent comparable store decline in the 52 weeks of 2002.

Business Leaders Like Hertzberg in Mayor’s Race By SLAV KANDYBA Staff Reporter The San Fernando Valley business community has given a warm reception to the candidacy of former California Assembly Speaker Robert Hertzberg of Sherman Oaks for mayor of Los Angeles. Hertzberg, now an attorney at the downtown office of Mayer Brown Rowe & Maw, formally announced he was running on April 21. His decision came several days after Mayor James K. Hahn rolled out a budget proposal seeking to cut the city budget for the upcoming year. Long rumored to be interested in running for the position, Hertzberg joins State Sen. Richard Alarcon (D-Sylmar) as official candidates for the mayoral election to be held next year. Other possible candidates, both of which have yet to formally declare their candidacy, are city council members Bernard Parks and Antonio Villaraigosa. Although he left Sacramento in 2002 because of term limits, Hertzberg, a Democrat, has been an adviser to Gov. Arnold Schwarzenegger. He has helped the Republican governor smooth out relations with the predominantly Democratic state legislature. In vying for the position of mayor of Los Angeles, Hertzberg said he believes his ability to work across party lines will be a strong asset, in addition he cites his extensive experience working in various capacities throughout the city. “I plan to have a vision and work closely with the city council just like I worked with the Assembly,” Hertzberg said in an interview with the Business Journal. With respect to business, and the Valley in particular, Hertzberg said his priorities would be to identify crucial industry clusters and develop policies that would help them improve. “Let’s have policies that attract rather than detract jobs,” Hertzberg said. In a statement titled “Moving Los Angeles Forward,” Hertzberg said he would “unveil a detailed strategy to focus all departments of the city on our economic competitiveness,” with job creation as a central theme. He also introduced an interactive weblog on the Internet (www.bobhertzberg.com). Regarding his close relationship with Schwarzenegger, Hertzberg called it an “advantage” over his opponents. But he chose to stress his local experience. “The biggest thing that gives me the edge is (experience working) in different areas of the city,” he said. In his statement, Hertzberg mentioned he has worked to bring affordable housing to Lincoln Heights, provide a youth center in south Los Angeles and has volunteered in pre-schools throughout L.A. Members of the Valley’s business community who were asked for their impressions of Hertzberg as a mayor brought up diplomatic ability and bipartisanship as a strength. Although all stopped short of endorsement, they weren’t shy on accolades for the newly minted mayoral candidate. “I think he’s a real problem solver, I think what he showed in Sacramento is that he knows how to get deals out, whether through the energy crisis or water wars,” said Fred Gaines, a managing partner in the Encino-based law firm Gaines & Stacey who specializes in real estate and land use issues. Gaines, who worked with Hertzberg at the Valley Industry and Commerce Association, called the Sherman Oaks resident’s decision to run “great news,” and described Hertzberg as “energetic, bipartisan, creative and a real roll-up-the-sleeves kind of guy.” Diplomatic ability He accented Hertzberg’s diplomatic ability, in particular: “I think he can cut through the red tape and make the city much more business friendly,” Gaines said. And Gaines said he thought he wasn’t alone. “There are a lot of people in the real estate industry that support his candidacy.” Bonny Herman, VICA president and CEO, also said Hertzberg’s ability to work in a bipartisan fashion makes him a strong candidate. And although she stopped short of endorsing him, she complimented Hertzberg and said she believes he was a good candidate to unseat Hahn. “I think he’s much more balanced and open. (There is a) higher probability there will be more compromise with someone who has a relationship with (Schwarzenegger),” Herman said. “I think that people will be very interested in this candidacy, people have worked with him on many projects, (because) he’s accessible and he’s approachable.” Bruce Ackerman, president of the Economic Alliance of the San Fernando Valley, said Hertzberg has an advantage over his opponents in the race because he has “a statewide presence” and because as a result of working in downtown L.A. he will have a “wider pull.” Hertzberg tapped David Fleming, an attorney in the Universal City offices of the international law firm of Latham & Watkins, to join his campaign team. The team includes a group of leaders from L.A.’s business, civic and philanthropic organizations and communities. “(Hertzberg) has always been pro-business he understands the needs of business,” Fleming said. “We’ve been talking about business tax reform for years.” Sandra Frohlich, executive director of the Sherman Oaks Chamber of Commerce, said Hertzberg has been “responsive to our concerns and willing to share his point of view and things he was trying to accomplish.” Given his background, she said, Hertzberg would be an “interesting” addition to the mayoral race. David Goodreau of the Small Manufacturers Association of California said he likes Hertzberg because he “can work both sides of the aisle” in Sacramento. Also, the ex-Assembly speaker’s ability to “take a stand” has impressed Goodreau. “The thing I like about (Hertzberg) is that he is charismatic and he is a leader,” Goodreau, of Sherman Oaks, said. “We need people that can really motivate.”