N.Y. Stock Exchange Delists Panavision After 40 Years Media & Technology by Carlos Martinez The news gets worse and worse for motion picture camera-maker Panavision Inc. The Woodland Hills company was delisted last week by the New York Stock Exchange after it failed to meet minimum capitalization requirements set by the exchange. It had been listed on the NYSE for more than 30 years. Adding to Panavision’s woes were newly released second-quarter figures last week that show a 22-percent drop in revenue from the same quarter a year earlier. The company reported a $6.4 million loss on $43.3 million in revenue, compared to a $1.1 million loss on $55.2 million in revenue a year earlier. The double dose of bad news is not what Panavision needs as it continues to struggle with its mounting debt, said Milan Vukovic, an analyst for Infinity Financial. “Anytime you get delisted, it sends a red flag to investors and you’re really going to have a hard time getting financing and restructuring your debt,” he said. Panavision is now listed on the Over-the-Counter Bulletin Board under its new symbol PVIS. Its NYSE symbol had been PVI. The company’s total debt is $533.4 million with assets listed at $605.6 million. Panavision has not posted an annual profit since 1997. Saban Bids for German TV Giant Billionaire producer and creator of TV’s “Mighty Morphin Power Rangers” Haim Saban has submitted a $2.6 billion bid for bankrupt German television conglomerate KirchMedia, a unit of Kirchgruppe A.G. Saban, chairman and CEO of Burbank-based Saban Entertainment Inc., submitted his bid earlier this month along with six other groups competing for control of KirchMedia’s assets, said a spokesman for Saban. A German bankruptcy court is overseeing the bidding process after the company filed for bankruptcy protection in February. KirchMedia’s core assets include a 52.5-percent stake in Germany’s largest on-air television broadcaster ProSiebenSat.1. The company also owns scores of films, television programs and rights to sporting events and German soccer league matches. Saban last year sold his 49.5-percent stake in Fox Family Channel to Disney for about $1.5 billion. Semtech Denies Infringement Claim Semiconductor-maker Semtech Corp. is ready for a fight, or so it seems after it vehemently denied it infringed on patents owned by Maxim Integrated Products Inc. of Sunnyvale. Semtech CEO John D. Poe said his company has not violated any patents and that Semtech has issued its own patent for the technology in the SC1402 power supply controller, which Maxim claims violates its patents. In its suit filed on Aug. 9, Maxim accuses Semtech of using its patented technology in the power supply device for computers, communications and electronic testing equipment. The SC1402 was originally issued in August 2000. In its court response, Semtech affirmed that the device does not violate patents and suggested that Maxim’s patents are invalid. Semtech said it will continue to sell the SC1402 while it fights the lawsuit. Jack Gifford, Maxim’s chairman, said he is committed to defending his company’s patented technology. “We value our reputation as an innovator in this field and we are committed to defending our intellectual property,” he said. Semtech makes semiconductors for computers, communications equipment and industrial devices. During 2001, the company reported $26 million in net income on revenue of $191.2 million. NBC Says No to KVEA Raises Despite a non-binding Los Angeles City Council resolution last week, NBC officials said they don’t plan to raise the pay of television anchors and reporters at Telemundo Communications’ Glendale-based KVEA-TV Channel 52 to that of their NBC counterparts at sister station KNBC-TV Channel 4. Paula Madison, general manager of KNBC, said the network has no plans to alter salary structures for KVEA on-air personnel. Madison said things may change should KVEA employees vote to join the American Federation of Television and Radio Artists. AFTRA said it is currently organizing at the station and a vote on whether to unionize could take place later this year. NBC acquired Telemundo and its 23 television stations, including KVEA last September for $2.7 billion. Altrio Cashes In on Adelphia Woes Glendale-based broadband provider Altrio Communications Inc. is gaining subscribers in Monrovia where customers of Adelphia Communications have been abandoning the cable firm due to its ongoing financial troubles. Brenda Trainor, Altrio vice president of public policy, said the company has gained nearly 2,000 customers since April in the San Gabriel Valley community served by Adelphia. “It’s not our intention to benefit from their problems, but it is happening,” she said. The company, which began operations in October 2000 with an initial $125 million raised from venture capitalists, has signed agreements with Pasadena, Arcadia and Monrovia to provide broadband service. Altrio offers cable television, Internet access and video on demand through its fiber optic broadband connections. The company offers its “BoxSeat” cable service equivalent to basic cable on other systems, offering 80 channels and costing $39.95 a month. Staff Reporter Carlos Martinez may be contacted by calling (818) 676-1750, ext. 17 or by e-mail at [email protected].

Banking Success Stories Have Different Endings Oldest Community Bank in Valley Plans on Staying Right Where It Is By JACQUELINE FOX Staff Reporter The First State Bank of California has survived two recessions, a decade or so of industry consolidations and the most destructive earthquake to hit the Valley since a 6.5 trembler rocked Sylmar and much of the Northeast Valley back in 1971. The fact that, while four nearby banks were knocked completely out of commission for several days after the 1994 Northridge quake, First State, then named the Bank of Granada Hills, was up and running the next morning is perhaps a metaphor for the institution’s staying power. “We didn’t have electricity or running water, but we managed to open our doors and we were there for our customers the very next day,” said bank president and CEO Richard C. Taylor. While many community banks were being sucked up by bigger players over the last few years, Granada Hills was quietly wrapping up an acquisition deal of its own. The big difference is that it was the buyer, not the seller. The bank purchased Burbank-based First Coastal Bank last year and then changed its name to offer a more neutral presence in the Burbank community. Today, First State, originally opened in 1983, is the oldest community bank headquartered in the San Fernando Valley. The bank has roughly 4,000 deposit accounts and 1,000 loan customers. Primarily because of last year’s acquisition, the bank claims a 50-percent increase in total assets in the last 12 months, from $91 million to $135 million. Deposits have increased from $82 million to $124 million, with a consistent shareholder return on equity of about 16 percent. Taylor, at the bank’s helm since 1987, said the bank has had its share of buyout offers, but has stuck with its initial promise of staying small and focused on the middle markets, particularly the small business community. “We have been approached several times over the years,” said Taylor. “But we just felt that the offers were coming from people whose designs were not what we wanted. It’s been our structure from the very beginning to remain a community bank with personalized service. No one offered that.” How personal? Imagine this scenario: You call the bank during normal business hours and guess what happens? A real, live person answers the phone. In fact, said Taylor, “You can walk into my office any time of day. That’s what we are all about.” “We obviously have accounts at more than one bank, but most of our business is handled out of First State Bank,” said K.C. Fowler, executive director of Granada Hills Community Hospital Foundation. The Foundation has done business with the bank since the 1980s. “They have competitive interest rates and, because of their attitude of being willing to do what ever we need to do, we are able to keep our accounts fluid.” The bank has 39 employees today, many of whom came on board when the doors first opened. “When I took over we had about 34 employees. We were much smaller at that time and actually had to grow into those numbers,” said Taylor. “We have probably an average length of service here of about seven or eight years, so we’re kind of like family.” “We’ve been able to increase new product lines and services into the industry that the bigger banks have shied away from,” said Taylor. “The bigger banks often have minimum base lines for loans. A lot of them won’t look at anything under $3 million, but what about all those people who need small business loans, real estate loans? That’s where we’ve really blossomed. We target the small business community.” Ira Kaplan, owner of The Gold Rush jewelry store in Woodland Hills, said that, after going through three bank takeovers where he once did business, he’d had enough of people not knowing his name, not answering his calls and having little knowledge of the history behind his 28-year-old business. “I was a good customer at Bank of America, but they got so big the management was constantly changing and no one ever knew who I was,” said Kaplan. “So, I left, went to a small bank, then they got bought. I said, ‘Here we go again.’ After a year of that I said, ‘Enough of this,’ and went to (First State) and I am tremendously happy. I was really distressed with impersonal service, but I don’t have to worry about that now.” Roberto E. Barragan, president of the Valley Economic Development Center, said, “The Valley needs community banks like First State. Frankly, many small businesses here prefer to deal with smaller community banks because they don’t appreciate things like 800 numbers and having to go through layers of voice mail messages to get the service they need.” That’s not to say that keeping small amid an era of technological advances hasn’t produced some challenges. The emergence of the Internet, online banking and automated banking services have reshaped the industry landscape and banks like First State have felt the impact and had to adjust. “The industry probably has changed more in the last five years than in the whole 15 years that I’ve been here,” said Taylor. “We’ve moved away from being just banking and into the financial services business, and I think that’s changed us a lot. But we are evolving while trying to remain focused on our original plan to work with the local community.” First State has been designated a Super Premier Performing Bank, the highest rating offered by the Orange County-based Findley Companies, which puts out the annual Findley Reports rating the nation’s financial institutions on everything from service to fiscal liability. “I’m proud of the way we’ve adapted to new technologies and with our ability to weather the storms,” said Taylor. “The technologies we have now make the world more complex, and that’s been a challenge. But we’ve been successful at it.”

BANKRUPTCIES Oak Park Calabasas Condominium Association (homeowners assoc for 268 condos) 4700 Park Granada, Calabasas 91302 Chapter: 11 Assets: $715,000 Debts: $8,000,000+ Doc #SV02-17038-GM File-Date: 08/06/02 Attorney: Rouger Landau 310-277-4110 Ghoogas A. Nahabedian DBA: Larchmont Cleaners; Stockholm Cleaners; Bowman’s Cleaners (business type n/a) 19559 Los Alimos St., Northridge 91326 Chapter: 11 Assets: N/A Debts: N/A Doc #SV02-16989-KL File-Date: 08/05/02 Attorney: Stephen Burton 818-501-5055 Einsurance Systems Inc. (business type n/a) 30699 Russell Ranch Road #200, Westlake Village 91362 Chapter: 7 Assets: $0 Debts: $3,535,983 Doc #SV02-16907-AG File-Date: 08/02/02 Attorney: Donald Segretti 949-553-8088 Young Hwa Ahn ABC One Hour Photo & Camera (photo and camera repair) 10444 Canoga Ave., Chatsworth 91311 Chapter: 7 Assets: $1,728 Debts: $464,129 Doc #SV02-16948-GM File-Date: 08/02/02 Attorney: No outside representation. James A. Galutza II Treasure Cove; Galutza Enterprises (business type n/a) 8813 N Bluffdale Dr., Sun Valley 91352 Chapter: 7 Assets: N/A Debts: N/A Doc #SV02-17004-AG File-Date: 08/05/02 Attorney: Daniel Sweeney 818-841-9300 Energizer Products, Inc.(Involuntary Chapter 7) (retail/wholesale) 5805 Sepulveda Blvd., Van Nuys 91411 Chapter: 7 (Invol.) Assets: N/A Debts: N/A Doc #SV02-17005-KL File-Date:08/05/02 Attorney: Rutter Hobbs Davidoff-for petitioner. 310-286-1700

Miller Automotive Sold to Fortune 500 Firm By SHELLY GARCIA Senior Reporter Miller Automotive Group, a $400-million dealership with six Los Angeles locations, has been sold to Group 1 Automotive Inc., a Fortune 500 car retailer based in Houston. The acquisition marks the first entry by Group 1 into the Southern California marketplace. Miller operates Honda, Nissan, Infiniti and Mitsubishi dealerships in Van Nuys and Toyota and Honda dealerships in Culver City. In addition, the company has recently completed the purchase of a parcel on Ventura Boulevard in Woodland Hills which Group 1 will use to set up another Nissan dealership. “We have wanted to be in California since we went public,” said Ben Hollingsworth, chairman, president and CEO of Group 1. “And we’ve known the Millers for some time and have never been able to put it together. We were just patient.” The purchase price for the dealership was not disclosed. However, in announcing the acquisition, Group 1 said it paid $85 million in cash for Miller and four other individual dealerships in Tulsa and Houston that it bought at the same time. Group 1 said the five dealerships have a total of $530 million in annual revenues and, because of Miller’s size in relation to the other stores, it’s presumed that the dealership comprised the bulk of the purchase price. The Miller Group has been family owned for 60 years. The Miller Automotive Group ranked 64th in the United States on the Ward’s “MegaDealer 100” list of top dealerships. The stores will continue to operate under the Miller name and upper management, as well as middle managers at the dealerships, will remain intact, Hollingsworth said. Fred Miller, the company’s CEO, and Mike Miller, president, will remain with the company under three-year contracts. Dave Hutton, COO for Miller Group, has been named platform president of the dealerships by Group 1. In Group 1 parlance, a platform is the core set of dealerships in a market. The company hopes to add to that list of Los Angeles dealerships in coming years. “We like to establish a platform and build with tuck-in acquisitions,” said Hollingsworth, explaining that a tuck-in is a single franchise that is acquired and then “tucked into” the initial core dealership. “We do it for brand augmentation and because it’s more revenue to cover our operating expense budget.” Group 1, with revenues of nearly $4 billion in 2001, already owns 69 dealerships in Texas, Oklahoma, Florida, Georgia, New Mexico, Colorado, Louisiana and Massachusetts. Net income increased 36 percent to $19.1 million or $0.78 per diluted share, on revenues of just over $1 billion in the second quarter ended June 30. In releasing its second-quarter results, the company gave earnings guidance of $2.75 to $2.85 per share for the full year. Following the Miller acquisition, Group 1 raised the guidance to $2.80 to $2.90. The acquisition places Group 1 into the largest automotive market in the country, with the dominant brands in Southern California. “Nationally, these brands have about a 20-percent market share,” said Hollingsworth, referring to the Japanese marquees. “In the L.A. market, those brands have about a 40-percent market share, so those are the brands we want to be in.” The acquisition mirrors a growing trend away from family-owned dealerships. Individual dealer groups under Group 1, which went public in 1997, operate autonomously, but take advantage of a number of economies of scale and corporate benefits. Because of its size, Group 1 can borrow money more cheaply than can a small, private dealer, lowering the cost of inventory along with other costs, such as insurance for the vehicles on the lots. And Group 1 provides corporate employee benefits packages which are typically not affordable to mom-and-pop retailers. Fred Miller declined to comment on the details of the sale, referring calls to Group 1. Hollingsworth said the family’s decision to sell was part of an exit strategy. “Their business has been in the family for almost 60 years,” said Hollingsworth. “They reached the decision where they needed to get their estate in liquid order and prepare for their eventual retirement. This provided them an outlet.”

News Only Gets Worse as Vitesse Stock Price Plunges By MICHAEL HART Staff Reporter Investors those still in the market, that is are reportedly looking for its bottom. The chances are none of them though are looking as hard as Vitesse Semiconductor Corp.’s executives. Stock in the Camarillo chipmaker traded as high as $106 a share in early 2000. But when the company announced on July 17 that it would lay off 200 employees, curtail research and development projects and reconsolidate facilities, shares were trading at $3.35. The restructuring wasn’t the only bad news that day either. Vitesse reported a $735.9 million net loss on $43 million in revenue for its quarter ended June 30. After stripping out one-time charges like $403 million for a reduction in book value of goodwill and $126 million in deferred tax assets, Vitesse reported a loss of $20.6 million. In the same quarter a year earlier, Vitesse reported a net loss of $69.6 million on $60.1 million of revenue. Then on Aug. 9, the day the company announced it was closing down its network processor development program, its stock closed at $1.50. By Aug. 16, it was trading at $1.28. “Everybody in the IC (integrated circuit) space has been hit hard by the downturn,” said Hans Mosesman, an analyst with Prudential Securities Inc. Indeed, using the July 17 Vitesse earnings release as a baseline, all of its competitors have had a rough few weeks. On that day, PMC-Sierra Inc. traded at $10.03, by Aug. 16 it was at $8.15. On July 17, Applied Micro Circuits Corp. sold for $5 a share; on Aug. 16 $5.01. On July 17, Agere Systems Inc. sold for $2.50; by Aug. 16, $1,74. But, Mosesman went on, “Vitesse has been hit particularly hard.” Indeed, matters appear to have only gotten worse. Mosesman had already downgraded Vitesse to a “hold.” Two days after its earnings report, Goldman Sachs and CE Unterberg Towbin both downgraded to “market perform.” In fact, since Sept. 11, 2001, nine analysts have downgraded Vitesse’s stock. One, Pacific Growth Equities in January, has upgraded it. Sandy Harrison, an analyst with Banc of America Securities, said, “There is concern that Vitesse may be taken out of the S & P; 500 index,” and Mosesman said, “I would expect a lot of companies to join forces in the coming year. Vitesse might be one of them.” A spokeswoman for Vitesse said nobody at her company was available for comment for this story. However, she passed on a statement from Controller Yatin Midy concerning the possibility of withdrawal from the S & P; index and a potential acquisition that read, “I deem these as rumors and it’s company policy not to confirm or deny rumors.” At the time of its earnings report last month, CEO Lou Tomasetta said that, with the cuts already made, Vitesse’s break-even point becomes $60 million in revenue per quarter, something he expects in 2003. Mosesman said, “For us, we’d say it will probably be more like March ’04. “They’re over half a billion (dollars) in debt. That is a balance sheet that is not ideal for a prolonged downturn.” Perhaps adding insult to injury for the entire chip sector are the actions of its best customers. A year and a half ago, there was a sense large telecom firms like Cisco Systems Inc. and Nortel Networks were suffering along with their smaller suppliers. Since then, many have managed to help their own gross profit margins by forcing their suppliers to cut or at least hold down their prices. For instance, Cisco’s gross margin has increased from 52.3 percent in June 2001 to 67.7 percent in June of this year. At the same time, Vitesse’s margin has dropped slightly from 49.4 percent in June 2001 to 46.5 percent a year later. Competitor Agere has seen an even more dramatic drop in margin during the same period, from 25.4 percent to 11.3 percent.

Levine Says Anti-Breakup Flier Is His, Not One L.A.’s Politics by Jacqueline Fox Larry Levine, head of One Los Angeles, has beefed up his anti-secession campaign with a series of fliers, sent primarily to the press, which he unabashedly calls “hit pieces” aimed at, well, “just giving people something to think about,” or so he says. The series of (so far, three) fliers entitled “Distortions, Deceptions, Fabrications and Fairy Tales” asks recipients to reflect on statements and figures propounded by secessionists and released in a report on the new Valley city’s viability by LAFCO and officially approved in June. Levine asks recipients to decide if statements and other facts are “distortions, deceptions, fabrications, fairy tales, outright lies or other.” For example, in the third of the series he states that the Valley represents 36.53 percent of the population of Los Angeles, and then points out that the Valley’s contribution to the city’s general fund is 30.57 percent. The implication, said Levine, is that secessionists’ primary battle cry, that the city charges the Valley more for services than it actually provides is a, oh, I’ll pick “fabrication.” The fliers, however, do not carry the “One Los Angeles” logo. Instead, they come with Levine’s own company name, Larry Levine & Associates, stamped in bold across the top. When asked why the fliers did not make reference to One Los Angeles, Levine said he simply wanted to send out little tidbits of information he’d “stumbled across.” “It’s guerilla warfare,” said Levine. “If I wanted to send them out on the (One Los Angeles) letterhead, I’d have to check with everyone on the committee and jump through a whole bunch of hoops. I don’t have time for that.” Levine also questions why LAFCO’s prescribed alimony payment to the city of Los Angeles was boosted at the last minute from $57.5 million to $128 million. He suggests that somebody likely had the larger amount in mind all along but kept it out of the LAFCO report until the last minute because it proved the new city would be starting off with more debt than initially thought. But when questioned about the payments, which secessionists say represent the difference between what the Valley now pays the city for services and what it actually gets, he said the numbers were just “simply that easy to manipulate.” “What I’m saying is, if they (secessionists) want to play with numbers, you can make them do what ever you want them to,” Levine said. Another of Levine’s tidbits is that 57 percent of the city’s public golf courses are in the Valley, suggesting that those represent just one asset the Valley has a monopoly on relative to folks south of Mullholland Drive. Valley VOTE Chairman Richard Close said he hadn’t received any of the fliers and suggested that they were “probably not very credible,” particularly if Levine is sending them out on his own letterhead instead of under the One Los Angeles moniker. “I suspect the press is just trashing them,” Close said. “I haven’t seen them, but I’d like to because it sounds like they are just a veiled attempt to distort facts. Otherwise, why not make them official.” Horse Country A small contingent of homeowners in Chatsworth fighting a proposed housing development known as Deerlake Ranch have won the backing of County Supervisor Michael Antonovich in their battle to control the size of the planned housing lots. Allen Glazer, president of the Chatsworth Chamber of Commerce and a member of Save Chatsworth, said Antonovich’s backing gives the newly formed group political clout and could stave off an upcoming decision by the city’s planning commission to move forward on the project. At issue is a planned housing development by San Francisco-based Presidio calling for between 424 and 480 homes on roughly 200 acres at the far north end of Canoga Avenue above the 118 Freeway. Save Chatsworth, comprised primarily of long-time horse owners with large lots, wants Presidio to increase its projected lot sizes of between 6,000 and 15,000 square feet. Instead of a mix of lot sizes, Antonovich and the group are asking Presidio to make all the lots a minimum of 15,000 square feet so that if buyers want to own horses they too can do so. “This is about density,” said Glazer. “We just want to make sure that this project is in keeping with the character of the neighborhood. We don’t want to see a development that’s just a bunch of houses on top of houses. We have no problem with the development. We just hope the developer is going to understand that.” The group is also concerned with the impact of traffic. They say the project will result in between 5,000 and 10,000 more trips a day, threatening to jam the entryway to the woodland area. Save Chatsworth, certified in July by the county to raise funds, has about 30 members and has raised close to $9,000 in the last two weeks, according to its treasurer, Jan Evanson. The DeerLake Ranch issue has been a thorn in the side of residents of the area for several years, according to Evanson, and is the driving force behind the group’s other interest: secession. She said most in the group and the area hope voters pass the secession initiative in November because, she said, they believe a smaller government would be more sympathetic to their cause. “We’re talking about local control, so of course we support secession,” Evanson said. “We have not been fairly listened to by the city and we think a local governmental body would do a better job of letting us have our say.” The Money Issue The Valley Independence Committee, the key group heading the secession movement, is forming a separate arm to focus solely on raising funds for the Valley secession campaign. The upcoming creation of a finance committee marks the group’s first significant step toward raising cash to combat Mayor James Hahn’s anti-secession campaign, which he has vowed will have a $5 million war chest of its own. The committee will focus on large businesses in the Valley, but also target philanthropic groups and others with deep pockets that have either come out in favor of a breakup or may be persuaded to do so. The names of the committee members were not released at press time. Jacqueline Fox is politics reporter for the San Fernando Valley Business Journal. She can be reached at [email protected].

Valley Forum: Know a Good Place for Lunch? Since the beginning of the year a number of companies have moved from both elsewhere in the Valley and elsewhere in Los Angeles to the vicinity of the newly renovated Sherman Oaks Galleria. Many have said they, their employees and their clients prefer to be near the restaurants and shops that have also moved into the Galleria. So, the San Fernando Valley Business Journal asks, when it comes to picking a location for an office, how important is it to have the kinds of amenities you can take advantage of at lunch or after work nearby? Jacques Soriano Senior Account Executive Adwest Mailers Inc. Sylmar Since where I work in Sylmar there are very few, if any, restaurants to frequent, I would be very happy and excited to be in a complex like the Galleria, which has numerous restaurants in it, or very close by. Steve Wold President S & W Communications Van Nuys I just bought an office building in Van Nuys to which we are moving Sept 1. The proximity to food and entertainment establishments is important for the large picture of making employees happy enough to want to stay a while. Our new office will be near The Plant and provide all those good things. In our business, the most critical aspect of location is to be centrally located and near a freeway. Donald Hayes Owner’s Representative Realty Bancorp. Woodland Hills This is primarily why areas like Warner Center with several restaurants, theatres, shopping, health clubs, etc. traditionally have higher rents and occupancy. The Trillium on Canoga Avenue did this “self-contained” concept, with no theatres but a full service health and tennis club, car wash/detail, dry cleaners, hotel and restaurants, in the early ’90s. Its traditional occupancy is way over 95 percent. The Sherman Oaks Galleria is new state-of-the-art construction, well designed, well-managed and, just as important, very well-located at the nexus of the 405 and 101 with on and off ramps in every direction. Don’t forget that the Galleria is a “redo” of an older office/shopping center that once comprised over 150 percent of what is there now. Remember the first three rules of real estate: location, location, location! Ian B. Thomas Partner Thomas Consulting Group Sherman Oaks I could see how amenities are very important for many companies seeking office space or looking to move, but for me that’s not the only reason. In today’s age of spending endless hours in rush hour traffic daily and having worked for 10 years in downtown L.A. my partner and I made a conscious decision to forego prime office space in the L.A. basin to locate our office closer to where we reside (Studio City and Valley Village, respectively). Now that we spend less time on the Hollywood Freeway, we can spend more quality time with our families. Of course, it did help when our broker mentioned the new Starbucks being built across the street from our office. Robert B. Lamishaw President JPL Zoning Services Inc. Van Nuys Amenities and availability of residential uses are important elements in selecting an office location. However, in our particular business, proximity to the City Planning Department is of key importance. We get a lot of walk-in business after people are completely confused and frustrated by what City Planning and/or Building and Safety tell them.

Banking Success Stories Have Different Endings Union Bank Buys Itself a Stake in Fast-Growing Santa Clarita Valley By CARLOS MARTINEZ Staff Reporter The Santa Clarita Valley’s dramatic expansion in both residential and commercial development over the past five years has been good to Valencia Bank & Trust. Providing many of the real estate and commercial loans that helped fuel the area’s growth, Valencia Bank has seen its own overall numbers grow along with its customer base. In 2001, the bank’s total assets rose from $221.4 million to $249.6 million while its gross loans rose by 15 percent, from $134.1 million to $154.1 million. Business was so good, in fact, it caught the eye of Union Bank of California, which earlier this month agreed to acquire Valencia for $62 million in cash and stock. The acquisition paves the way for Union’s entry into the fast-growing Santa Clarita and Antelope valleys. Richard C. Hartnack, vice chairman of Union Bank and head of community banking and investment services, said the Valencia acquisition allows Union to expand into one of the county’s fastest growing markets. “We expect to build upon its success by providing customers with a broader set of financial solutions for their business and personal needs,” Hartnack said. “We like the fact that they stress customer service like we do,” said John M. Reardon, president and CEO of Valencia Bank, who is known to deal personally with customers himself on many occasions. As part of the deal announced Aug. 6, Union Bank will acquire all five of Valencia’s branches in the Santa Clarita and Antelope valleys. Jeri Harman, principal of American Capital Strategies Inc. in Woodland Hills, said Union Bank’s acquisition is part of an overall trend in the banking industry to create an instant presence in a new market by way of consolidation. “It’s a move that makes a lot of sense if you want to get a piece of that Santa Clarita market,” Harman said. Lorenzo Flores, regional director for the U.S. Small Business Administration, said Union Bank’s acquisition will likely mean more SBA loans to small businesses in the Santa Clarita Valley. “Valencia has not been a part of our program for years, Union Bank has been starting to do more SBA loans and that is going to help that area,” he said. SBA loans carry low interest rates for small businesses that are guaranteed for up to 85 percent of their value by the federal government. Reardon said the deal reaffirms his bank’s position as one of the fastest growing banks in the northern part of Los Angeles County. “We always felt that the Santa Clarita Valley would give us the opportunity to grow and grow quickly,” Reardon said. Valencia Bank & Trust was created after Valencia National Bank and First Valley National Bank of Lancaster merged in 1999. It has been at the forefront of development in the Santa Clarita Valley ever since. From 1999 to 2001, revenue for the bank grew from $13.8 million to $18.8 million. “They’re well positioned in an area where growth has been fast and is continuing,” said S. Alan Rosen, an attorney and partner with Calabasas-based Horgan, Rosen, Beckham & Coren, who has brokered a number banking deals in the Valley in recent years. Part of Valencia’s success comes from its ability to cater to small and mid-sized businesses, professionals and entrepreneurs who make up much of the area’s growing business community, Rosen said. “They’re small, but they can respond quickly to customers’ needs,” he said. By pushing its commercial real estate loans, which make up 40 percent of its portfolio, along with its land development, business and residential mortgage loans, the bank has improved its revenue like never before, Reardon said. “Housing and commercial construction has been really strong in Santa Clarita, and that’s been a big plus for us,” he said. The bank uses funds from deposits such as certificates of deposits, money market and retirement accounts to write a variety of loans. “Our major growth has been in the deposit area and the commercial real estate area, in particular, both of which reflect a growing customer base,” Reardon said. “We feel we’re in the right place at the right time and in an area where housing is still booming and retail space is being built.” “When the merger is complete, Union Bank will have a market share in the area that is equal to that of Wells Fargo and one half the size of Bank of America and Washington Mutual,” Reardon said. Union Bank’s acquisition could also indirectly help another potential bank startup in that area, Rosen said. “The success of Valencia was being an independent and giving customers a chance to deal directly with its upper management and decision makers, but that is something that will be lost as a result of this deal,” Rosen said. “A lot of people like dealing with a small bank because of that and it’s going to open things up for somebody else to come in up there.”

When Do You Get to Ask Candidates Some Questions? From The Newsroom by Michael Hart Successful runners, like all successful athletes, know to always expect one more obstacle. Regardless of what may have been required to win one race, one game, something else you didn’t anticipate always stands between you and winning that second race, the season, the championship, whatever it is you want. The best learn to anticipate what others never saw coming. The same appears to be the case with secession campaigns: It’s always something. Much of 2001 and early 2002 was taken up with questions about money: What is this alimony business, how much is it and can a Valley city afford it? Can we be assured that, following secession, water and electricity rates will remain where they are? Would a new city have enough money coming in and going out to survive? The answer, as far as I’m concerned, is yes. The next step: Is there the public support for secession? Can it win on Nov. 5? The answer to that is probably yes too, assuming a few things happen: First, that the overwhelming majority of Valley voters in favor of a breakup actually get to the polls, and get there in such numbers that they overwhelm the no votes and the no-shows in the rest of the city (which is entirely possible given the Valley’s voting record in past elections relative to most of Los Angeles). Second, that the Valley secession campaign successfully neutralizes the irrational scare tactics demonstrated by the anti-secession side in a recent debate in front of Valley realtors between Valley Independence Chairman Richard Katz and City Council President Alex Padilla. (Katz got it right and Padilla got it wrong, but before long the debate will be in front of all of Los Angeles, not just a couple of hundred real estate agents, most of whom had already decided which side they were on.) So, what’s the next obstacle? Making sure the kinds of people who read a publication like this get what they want out of a new city government, before it’s too late. Here’s what bothers me. Elsewhere in this issue you’ll read about the chances that a new Valley city could accept or reject the current living wage ordinance that requires just about anybody who does business with the city in even the most remote way to pay workers at least a couple of dollars over the federal minimum wage. It’s one of dozens of issues a new city council will have to take up within its first four months in office. No one would argue it’s the most important one but still, when Business Journal reporter Jacqueline Fox last week asked state Assemblyman Keith Richman, the most serious candidate for mayor of a new city, his position on a living wage ordinance, his answer was, “I really don’t think the issue should be discussed until after a new government is in place.” What then is an issue that should be discussed before “a new government is in place”? Up to this point meaning the last couple of years this secession campaign has had a wait-until-next-year feel to it that made it easy for all the various interest groups who thought they could benefit from a breakup to get along. Those who thought their neighborhoods were being neglected because resources were going to other parts of L.A., who felt their children suffered because resources went to schools in and students from other parts of town, and who believed their businesses suffered because of a City Hall that has an anti-business bias could find common ground. Things, however, get dicier as it gets closer to the time to close the deal and, I believe, business interests have to begin to watch out for themselves. Maybe you can decide the living wage doesn’t affect enough companies to make a difference, but what about all the other issues an inexperienced new city council might have to make snap decisions on in its first few months in office? Shouldn’t that have anything to do with who you vote for in these maybe-kind-of city council elections? Wouldn’t it help if you knew your candidate’s position, for instance, on business tax reform before the election? You’d expect no less in a city council election where history wasn’t being made. Or how about his or her ideas for streamlining the city bureaucracy that business operators have to deal with? Isn’t that one important reason why many want to break away? What about specific plans for economic development? For keeping companies from leaving the Valley for greener, more efficient, cheaper-to-operate pastures? What can candidates tell you they’re going to do to protect business interests when they come into conflict with those of homeowner associations (and, believe me, they have their own horse in this race, even if business doesn’t)? Secession advocates wanted voters to pick a mayor and city council at the same time they said yes or not to a breakup, and they got it. They’re the ones who decided we would shape the ideology of a new government while we were deciding whether we even wanted it. They put this obstacle in front of themselves and business interests should demand more from these candidates than just “I really don’t think the issue should be discussed until after a new government is in place.” Michael Hart is editor of the San Fernando Valley Business Journal. He can be reached at [email protected].

Padilla Tries to Shift Focus Onto ‘Valimony’ Payment Politics by Jacqueline Fox If all Mayor James Hahn’s anti-secession campaign strategists have to offer over the next few weeks hinges on the rhetoric and often confusing misinformation offered up by City Council President Alex Padilla during a recent debate on Valley cityhood, I think the city would be wise to prepare for a breakup. During the debate, sponsored by the Southland Regional Association of Realtors Inc. July 25, Padilla attempted to square off against Richard Katz, chairman of the Valley Independence Committee, on the pros and cons of a Valley split. From this reporter’s view, Katz blew Padilla out of the water on issues ranging from the $128 million budget item I’ll call “Valimony,” to the transparent attempt by City Hall over the last few months to implement so-called city services with everything from white-gloved traffic cops on Ventura Boulevard to filling a few potholes in the Northeast Valley. Let’s focus, for now, on the $128 million the new Valley city would have to pay Los Angeles for its independence, because it clearly represents a key talking point for anti-secessionists. They fought like hell and won that same week to have the wording about the payments put on the ballot initiative for secession. In theory, the ballot language was aimed at convincing voters that, before they tick “yes” for secession Nov. 5, they ought to know their new government’s first action would be to write a check for that amount to L.A. Translation: your city will start out $128 million poorer than it is now. “Voters have the right to full disclosure,” said Padilla during the debate, adding that the payments would leave the new city weakened from the start and forced to call for tax increases or service cuts to make up the difference. But Katz not only came up with graphics and charts to present an accurate view of what the payments actually mean, he called the plan for an addition to the initiative exactly what it was: “A political attempt to control the campaign,” said Katz. He then explained that the so-called “alimony” figure represents what the Valley is already paying Los Angeles not only paying, but paying and not getting anything back for. That figure, for anyone who has yet to read the fine print, is not a new tax ,as Padilla and others would have us believe , and even Padilla admitted that during the debate. Instead, it is the difference between what the Valley now pays for services and what it actually gets. To the credit of secessionists, they fought for and won approval to also have that explanation included in the initiative wording. Katz also reminded the audience that the alimony payment would decrease by 5 percent each year until the 20-year period ends, representing a $1.3 billion windfall for the new Valley city over time. Paraphrasing Katz: That’s money that would otherwise go straight to the city’s coffers and, not only that, would depreciate over time. So far, with the exception of a few token gestures, there’s been little evidence offered up by the city that, without a breakup, the Valley would continue to get a higher degree of services over the next 20 years sufficient to keep pace with or even lower the fiscal disparity. Padilla also attempted to make a case for sticking together by pointing out that the new city would be forced to contract with Los Angeles for certain services, namely police, fire and emergency operations. “It’s the difference between renting and owning,” Padilla said, hoping to strike a chord with the roughly 300 realtors in the room. While on its face, the “I hate you, don’t leave me” analogy may seem to undermine the motivation for a breakup, it’s a fundamentally flawed argument. But here’s the real point, and I’ll paraphrase Katz again: How stupid does L.A. think the Valley voters are to imply that the new government, whether or not it is elected by a 15-percent or a 40-percent mandate, couldn’t negotiate new contracts with nearby municipalities for those services once the three-year transition period is up? Padilla attempted to bolster his case by pointing out that the smaller-is-better theme is weakened by the fact that people pay more for trash pickup in Burbank and Glendale than they do in Los Angeles. But consider what is at the very heart of the secession movement and you’ll get the clearest reason why Padilla’s argument can’t hold up: You don’t always get what you pay for. Services may be cheaper in Los Angeles, but the quality and consistency are lacking to the degree that the latest polls show a majority of Valley residents prefer to be on their own, and a narrow majority of voters citywide feel the same way. It may be true that, with the exception of a few debates, the campaign for a breakup has yet to really kick into high gear, but at least secessionists have done some homework. They know the importance of providing hard data to back up their case, especially when it comes to money. So far, the opposing camp has yet to offer up a single platform plank worth attempting to verify. Instead, the framework for the drive to hold L.A. together appears to hinge upon two things: invoking fear and twisting facts. Here’s a suggestion for Mayor James Hahn’s anti-secession team, One Los Angeles and the unions who’ve vowed to fight the initiative. Instead of trying to scare voters into thinking that once a new city is formed everything north of Mullholland Drive is going to fall into a black hole, how about coming up with the raw data that shows just how much worse things will get for those left behind? What will happen to federally funded programs if L.A.’s population slips? How much political clout would Los Angeles still carry in both Washington D.C. and Sacramento if it becomes the third largest city in the nation instead of the second? Is the city’s bond rating really in that much jeopardy? Do Los Angeles voters realize that roughly half of all manufacturing firms in Los Angeles are based in the Valley, and roughly 15 percent of the county’s average income earners live in the Valley? In other words, the anti-secession battle cry needs to take into account the folks who will likely make or break the vote Nov. 5: Valley voters. Speaking of Size The “smaller is better” slogan put forth by Valley secessionists has served as the dominant call to arms for months, with little response from the other side as far as a counter-catchphrase is concerned. So, recently the anti-secession group One Los Angeles came out with its own battle cry: “The more you know, the less you like it.” Soon one of the leading city unions campaigning against a breakup may have its own rallying cry too. Julie Butcher, manager of the Service Employees International Union Local 347, recently and jokingly tossed out, “How about, ‘Bigger is safer?,'” adding she didn’t get much of a laugh out of City Hall when she ran it up the flag pole. Jacqueline Fox is politics reporter for the Business Journal. She can be reached at [email protected].