With Secession Victory, Will Van Nuys Airport Win? From The Newsroom by Michael Hart The front page of the Feb. 4, 2002 edition of the Business Journal carried a photograph of a man named Mark Sullivan standing in front of a few of the planes he owned, parked on the runway at the Van Nuys Airport. The photo was taken on the runway, for one thing, because Sullivan can’t lease enough hangar space at the airport to fit all his planes into. As the story that accompanied Sullivan’s photo went on to explain, he is one of six business owners who lease space at the airport from Los Angeles World Airports who’ve been waiting some for as long as 12 years for permission from the L.A. city agency to expand. All that was holding them up was a master plan for the airport, LAWA told Business Journal reporter Jacqueline Fox, and that would be ready for review by mid-year. Here we are in early June as close to mid-year as you’re going to get and what is LAWA telling Fox now? Well, Valley VOTE, in its negotiations with LAFCO, managed to get the Van Nuys Airport on the list of assets that would go to a new Valley city if secession turns out to be successful. That should be considered a feather in Valley VOTE’s cap since the airport, the busiest general aviation airport in the world, is probably one of the most valuable city assets in the Valley. But it’s still in the hands of municipal bureaucrats and they have apparently announced that the master plan they’ve been talking about for years will just have to wait until after voters make a decision on whether the airport is actually theirs to deal with or not. That probably shouldn’t come as a surprise. If I ran LAWA and had major security concerns at every airport I operated, a huge battle over expansion at LAX on my plate and questions about whether I would even still own Van Nuys Airport by this time next year, trying to accommodate Skytrails Aviation (Sullivan’s company) would go to the bottom of my to-do list too. So business owners at the airport who want to expand but can’t because LAWA is dragging its heels are frustrated which is exactly the scenario you’d expect secession advocates to be able to exploit: Another example of a bloated L.A. city bureaucracy ignoring the needs and desires of what should be an important constituency: the Valley business community. Right? But don’t get too far ahead of the story here. There’s another constituency nearby that also happens to have an interest in the future of the Van Nuys Airport. At most monthly meetings of the Sherman Oaks Homeowners Association, Wayne Williams takes the podium to describe the status of discussion he and others in the group are having with LAWA and the city. Their beef is with the planes that use the airspace over their homes for takeoffs and landings. Typically, the news Williams has to deliver is not good. In fact, it’s somewhere close to the news Sullivan usually gets from LAWA: Nothing new to report. However, the message Williams delivers adds fuel to a fire of resentment that has been burning at SOHA for years. If there is one group that has been interested in seeing the Valley become its own city almost forever, it’s probably the largest, and one of the most powerful, homeowners association in the city. The high profile that the Sherman Oaks Homeowners Association has taken in the secession battle is probably helped along by the fact its president of a couple of decades, Richard Close, is one of the handful leading the secession movement. Close has told more than one reporter he has no interest in running for elected office in a new city and I believe him. But I find it hard to believe that, if secession is successful, he won’t have a little political muscle to flex if and when he chooses to. Likewise with the homeowners association. In fact, I imagine it will be one of a few special interest groups that will feel itself in a position to say to a new Valley city council, “We were here for you when nobody else was, and now it’s payback time.” Payback is liable to mean, among many things, a sympathetic ear on matters concerning the Van Nuys Airport. Neighborhood groups, as much as business interests, have been at the heart of the secession movement for years and are right to believe a new city government should address their needs immediately. So what’s a new city council to do? Who’s it going to try to please first? Business interests at the airport who want to grow their companies and are saying to new elected city officials, “Thank goodness for a government that will listen to our problems?” Or a powerful homeowners association that doesn’t want one more plane taking off or landing at the airport and is saying, “Thank goodness for a government that will listen to our problems?” If and when this situation comes up, I don’t know what a new Valley mayor and city council will do. But it’s the kind of “what if” business interests should be considering. Up to now, pro-secessionists have been able to get away with saying a new city would be “business-friendly,” not having to worry too much about what that really means. My guess, though, is that the story of conflicting interests that have a stake in the future of the airport is the kind of story that will be played out many times between now and a November election, indicating that choosing between a yes or no vote on secession is not going to be an easy decision to make. Michael Hart is editor of the San Fernando Valley Business Journal. He can be reached at [email protected].

Investor Skittishness Puts an End To Plans for New Community Bank By CARLOS MARTINEZ Staff Reporter Investors in a proposed bank meant to serve independent pharmacists and the San Fernando Valley say they’ve given up their fight to open for business in Encino this year. Martin M. Cooper, who led a Valley-based investment group to establish Horizon Bank, blamed the terrorist attacks of Sept. 11 and subsequent investor skittishness for the failed bid. “We were approved to go out and start raising funds three days after Sept. 11,” he said. “After that, it became very difficult to find investors.” The investment group had sought to establish Horizon with an anticipated $7 million public offering last September. Under state and federal regulations, the bank needed to raise the funds within three months of the offering. But even after a deadline extension to March, the group was unable to come up with the funding to establish the bank. By the deadline stipulated by regulators, the group had raised $4.5 million well short of the $7 million needed to start the bank. “We had a lot of people give verbal commitments and they later decided that they didn’t want to invest, so we ended up coming up short,” Cooper said. “It was simply not being able to raise sufficient capital,” said S. Alan Rosen, an attorney and partner with the Calabasas-based law firm Horgan, Rosen, Beckham & Coren, which was working with Cooper to put the deal together. Cooper hoped to create the bank as a way to serve the region’s independent pharmacists, whom he claimed were underserved by traditional financial institutions. In the past, the independent pharmacists received financing and other financial assistance from drug wholesalers. All that ended in 1996 when an estimated 40,000 independent pharmacists were awarded the $723 million settlement of a class-action lawsuit that alleged that drug companies and wholesalers sold their products to chain-owned pharmacies at lower prices than they did to independent pharmacies, forcing many out of business. The pharmacists’ fluctuating cash flow is often justification to deny loans, Cooper said. The bank could have served an estimated 1,000 independent pharmacists in the Los Angeles area. But Cooper said the effort isn’t completely over. “We haven’t really decided yet what we’re going to do next, but for now it’s over,” he said. In hindsight and after the events of Sept. 11, Cooper said, his investment group should have postponed its public offering for six months. “We felt we could make a go of it and be successful, but it was just a bad set of circumstances that we couldn’t overcome,” he said. Rosen said, despite the abandonment of plans for the bank, he still feels the Valley needs another independent bank. “I still think there is a market for a community bank in this area. I just think circumstances were very difficult and beyond what any of us could have foreseen,” he said. More than a hundred investors who expected to be involved with the bank have all received their initial investments back with interest, Rosen said. “The important thing is that no investors were hurt, all got their money back with interest and now we move on,” he said. Jack Feldman, CEO of First Commerce Bank in Encino, said starting a new bank amid the financial uncertainties following Sept. 11 would have been difficult no matter who was involved or what the circumstances were. “You’re really hard pressed to find investors after Sept. 11, and that was probably the key,” he said. Although some investors approached the group asking about taking a controlling stake in the bank, Cooper said they were rejected. “The major issue was that they wanted to have their people on the board of the bank and we felt that, if we couldn’t do it the way we planned, we shouldn’t do it at all,” he said. Although Cooper and his investment group lost an undisclosed amount of money in the deal, Cooper said he’d do it all over again. “I’m disappointed, but I still think it’s a damned good idea,” he said. “If somebody came along and asked me to go on the board of a bank like this, I’d do it in a second.

Landlords Working Harder To Keep Tenants Happy Real Estate by Shelly Garcia SunAmerica Cos. just re-upped its lease at Warner Center’s Plaza III, adding another 60,000 square feet to the 96,000 feet it already occupies. In another kind of market, such a move might escape my attention altogether. But this isn’t another market. It is the current one, where leasing activity is at a near-standstill and brokers have to turn over an awful lot of rocks. In this market, a deal, even a renewal, catches my attention, and once it did, I realized something else about this market: It’s good to be the tenant. SunAmerica’s 10-year lease is valued at $50 million. That comes out to about $2.67 per square foot. As CB Richard Ellis’ Bill Inglis, who represents Warner Center Properties, put it, “That’s a pretty good deal for 10 years. Two years ago, it would have been three bucks or more.” Warner Center Properties also has some pretty good reasons to give a little and then some. It’s got a 21-percent vacancy rate. One of its towers is empty with the departure of HealthNet. There are no big tenants out trolling for space. And the owners of the complex are deep into negotiations with potential buyers. But it isn’t just Warner Center offering big tenants good deals on renewals these days. With vacancies continuing to climb in the San Fernando Valley’s office sector, nearly all tenants are finding themselves in the catbird seat and they’re working it. Tenants renewing leases usually get a paint job, maybe new carpeting. Now they’re comparing the cost of these minimal improvements with the tenant improvement budget a new occupant might get in the current market and asking landlords for that expenditure in kind. They may not need new cabinets, or extra doorways, so instead they’re asking landlords to pay for such things as phone systems, or they’re asking for free rent or rent reductions. Sure, landlords can puff out their chests and remind tenants about the cost of a move, in productivity as well as dollars and cents. Some are even spending a little time with their tenants, developing the kind of relationship that they hope will help compensate for an extra 10 cents a foot in rent. But within reason, I’m told, they’re conceding to tenants’ demands. Those with the highest vacancy rates are offering the cheapest deals, but all landlords are feeling the pinch. “I don’t think there’s been a really good deal for the landlord here in the last 12 months,” said Brian Forster, co-owner at TOLD Partners, of the West Valley market. Depending on whose numbers you use, office vacancies in the greater San Fernando Valley area are up anywhere from 16 percent to 18 percent. That’s got landlords working very hard to keep their current tenants. And while rental rates are still averaging about $2.20 a square foot, not too far below where they were six months ago when vacancies were much lower, those numbers don’t tell the whole story. Which brings me back to SunAmerica. Chances are that $2.67 rate is going to look pretty good five years from now with another five years left on its lease. TV Land Principals of Pie Town Productions, a television production company specializing in reality and documentary programming, have acquired an 18,200-square-foot building at 5433 Laurel Canyon Blvd. in North Hollywood. The purchase price was more than $2 million Pie Town’s offices and studios will occupy the facility. Stacy Vierheilig at Charles Dunn Co. Inc. represented the buyers, Tara Sandler and Jennifer Davidson, and the seller, Marv Atkins. Warehouse Sale Marfred Industries has acquired a 98,000-square-foot warehouse in Sylmar. The company already occupies an adjacent building for its manufacturing. The purchase price was in excess of $62 per square foot, according to Ross Thomas, principal of Delphi Business Properties, who represented Marfred and the seller, Industrial Holdings. Camarillo Purchase Advanced Imaging Inc. acquired a 25,821-square-foot industrial facility in Camarillo for $1.95 million. The building, located at 829 Via Alondra, sits on 1.3 acres in the Industrial Complex of Camarillo. Stuart Scott, a broker with Daum Commercial Real Estate Services, represented the buyer. The seller was TOLD Corp. Short Flight CBOL Inc., a maker of aerospace products, subleased 12,376 square feet from McDonald’s Corp. at 21300 Victory Blvd. McDonald’s consolidated its training facilities at one location and leased the remaining space at the office building. CBOL is relocating from 6200 Canoga Ave. Tom Festa, broker with Grubb & Ellis, represented CBOL. McDonald’s was represented by Jeff Ingham and Dan Baumeister at Jones Lang LaSalle. Senior reporter Shelly Garcia can be reached at (818) 676-1750, ext. 14 or by e-mail at [email protected].

Valley Forum: Will Secession Help Your Business? On Nov. 5, the decision to turn the San Fernando Valley into an independent city, separate from the city of Los Angeles, will finally be on the ballot. While there are political and governmental issues involved, there will also be an impact on businesses. So, the San Fernando Valley Business Journal asks: If the Valley secedes, will the split help or hurt your business? And why? Karenjo Goodwin President and CEO Exact Staff Inc. Woodland Hills A secession study showed that a new Valley city would cut taxes for Valley homeowners and businesses by $30 million per year. That would be terrific for my company and anyone else’s located here. Dave Burtch Vice President Ameritel Inc. Northridge I support secession. I believe it will more closely align local government services with the tax revenue collected from the local populace. This in turn allows for a fresh review of what local government services are truly necessary and what can be outsourced to the private sector. Such an initiative will lower the necessary tax base. Lower taxes help the local economy, which improves the prospects for my business. Bruce Stein Director of Real Estate Shamrock Holdings of California Inc. Burbank This will not impact our business at all. On a personal level, I would encourage Valley secession and believe that the city is capable of standing on its own. If Valley secession is enforced, there are issues to consider as an independent city from Los Angeles, such as the organization of the police force and fire department. Martin M. Cooper President Cooper Communications Inc. Woodland Hills Marketing and public relations are fields that transcend boundaries. We have clients as far away as London and Brunei. A Mulholland Drive boundary between Los Angeles and a proposed Valley city will have no impact on our firm.

Valley Talk This Old Man So by now retailers have unleashed a gaggle of not-so-subtle messages, hoping to make the most of Father’s Day sales. And most are touting the same stereotypical gift ideas tool sets to ties. One marketer, however, is taking a different tack. Fashion Square in Sherman Oaks has gathered an anti-tie Father’s Day gift list that includes Swedish neck pillows (for the pain in the neck dad) , a secret agent recorder pen (for the spy wannabe dad) and something called “The Worst Case Scenario Golf Handbook” (for golfing dads). Then there’s the selection that screams old dad a record player that spins vinyl. No word yet on how many kids actually know what it is. Flowers for the Freeway Dena Feingold, owner of It’s a Blooming Business in Fashion Square in Sherman Oaks, has come up with an alternative to those flapping flags Laker fans typically have dangling from their car windows. The company is selling purple and yellow floral car wreaths to fans who want to express their love for the Lakers in a fresh way. And apparently, one of the Lakers’ more famous courtside devotees, Jack Nicholson, has taken to the idea and hung a “super-sized” one from his car. Rumor has it when he wasn’t driving he also hung the wreath from his trailer dressing room on the set where he’s currently filming a movie. The wreaths are selling for between $75 and $100.

LAWA Drops Ball on Van Nuys Airport Plan The Secession Question By JACQUELINE FOX Staff Reporter Should voters approve secession this November, the new city stands to gain a valuable but, by most accounts, mismanaged asset: the Van Nuys Airport. In addition to getting the largest general aviation airport in the world, the new city would inherit a decades-long battle between city officials, airport business owners and residents over expansion plans, noise controls and flight curfews. Aviators and residents alike say the airport’s management, Los Angeles World Airports (LAWA), has all but shelved the so-called “master plan” for land use at Van Nuys a plan now 12 years in the making and one that officials said would be ready this month. The Board of Airport Commissioners (BOAC) canceled a March 28 meeting with the L.A. Planning Commission where the two groups were expected to approve a draft of the master plan. “We were supposed to meet to expedite the plan, but that never happened,” said Planning Commissioner Bob Scott. “A plan is now up in the air, and someone has to get off their duff and do something.” A half a dozen or so business owners at the airport have all had their proposals for expansion rejected by the BOAC, thwarting expensive and time-consuming efforts on their part to accommodate business growth. “They rejected all the proposals and said, ‘Sorry,”‘ said Mark Sullivan, owner of Skytrails Aviation. “This is just like a broken record.” Finally, residents who’ve asked repeatedly to meet with Mayor James Hahn about their concerns involving expansion, noise and flight curfews have been flatly rejected. Wayne Williams, a member of Stop the Noise, said, “His (Hahn’s) bogus response to us was to turn my written request over to LAWA. By refusing to meet with us and hear our legitimate concerns, he has forced me, a native of Los Angeles, initially reluctant to participate in the secession process, to now support secession.” Repeated calls to all seven BOAC members were not returned. Stacy Geere, LAWA’s public and community relations director at VNA, said she could not confirm the status of the master plan. “I have no new information to give,” she said. Meanwhile, the foot dragging is producing more fodder for the pro-secession movement, which has long centered on issues of neglect and broken promises. With a ballot initiative on secession in place, the question many aviators and residents are beginning to ask is: will things be any better with a new city? Will a new city government support business growth at the airport, or residents opposed to airport expansion? “Things can’t get much worse than they are now,” said Gerald Silver, president of Stop the Noise, the Encino Homeowners Association and the Citizens Advisory Committee (CAC) on airport issues. Although the homeowners association, said Silver, has yet to take a position on secession, it plans to this month. “If we were to have the airport, we’d have a government that would be more sensitive to homeowners,” said Silver. “How can I say that with so much conviction? Because for the last 30 years I’ve seen the way LAWA has treated residents here. That’s proven.” Not necessarily, said Don Schultz, president of the Van Nuys Homeowners Association and member of the Van Nuys Citizens Advisory Council. “I don’t think a new government is going to make that much of a difference. I think the present government has been doing about as much as they technically and legally can, considering all the hoops they are forced to jump through,” Schultz said. Schultz pointed out that some of the mandates in the draft proposal for a master plan for Van Nuys have already been voluntarily implemented by the city, including the soundproofing of roughly 2,000 residential units near the airport and moving an 11 p.m. flight curfew to 10 p.m. “Pieces of the plan are working,” said Schultz, who takes a more business-friendly view of the airport and is often at odds with Silver on development and noise issues. Schultz said he supports secession, regardless of its impact on airport issues. “I’ve been a secessionist from day one,” said Schultz. “Would things be better? Who can say right now? Whether the new government would be more favorable to homeowners or aviators, I really don’t know. But the airport is losing money, and it should be treated like the valuable asset it really is.” Skytrails owner Sullivan, hoping to buy a slice of vacant land near his business to build new hangars, declined to say where he stood on secession or whether he thought a new city government would be more sympathetic toward aviators. “It could turn out to be just like what we have down in Santa Monica, where the residents there just want the airport to go away,” said Sullivan. “This is going to be a very tough decision to make, but the city sure isn’t helping their side much.” Although the airport has consistently operated in the red for the last several years, gasoline taxes the city collects now from aviators, coupled with the revenue potential for development, make the VNA one of the most valuable assets a new Valley city could ask for. One report released this year said if all the aviators’ plans were green-lighted by city officials, they would account for roughly 40 acres of new business development and pump an estimated $75 million into the local economy. Scott said, regardless of which way a new government swings, it would have to do a better job than the current city is at the airport. “It’s been 12 years we’ve been working on this (master plan) and, in the meantime, we have a grossly mismanaged asset losing money every day,” he said. The Federal Aviation Administration would have to approve the transfer of the VNA to a new Valley city, but Scott said there is little reason to believe it would object. “I can’t imagine why they wouldn’t,” said Scott. “It’s no sweat off their brow.”

The Digest: A ROUNDUP OF SAN FERNANDO VALLEY NEWS VICA Awards Announced Washington Mutual has received the Valley Industry and Commerce Association’s Robert E. Gibson Corporate Award for Excellence. Washington Mutual and other VICA annual award winners were announced June 6. VICA Chairman Fred Gaines that Washington Mutual was selected to receive the award because of its strong commitment to affordable housing, homeownership opportunities and economic development in the San Fernando Valley. “Washington Mutual is a superior performer in the banking industry, leading the nation in funds managed, home mortgage lending and deferred compensation products and services,” Gaines said. Other VICA annual award winners are: – VICA Volunteer of the Year: Cathy Maguire, The Gas Company – Outstanding Business Executive of the Year: Walter Mosher, Precision Dynamics. Corp. – Small Business of the Year: Mike’s Roofing Service Inc. – Not-for-Profit Organization of the Year: Valley Economic Development Center – Business Advocate of the Year: Bruce Ackerman, Economic Alliance of the San Fernando Valley. K-Swiss Announces Stock Split K-Swiss Inc. has declared a two-for-one split of the company’s Class A and Class B common stock. On June 21, stockholders will receive one additional share of common stock for each share of common stock they own on June 7. Following the split, the company will have nearly 13 million shares of Class A and 5.6 million shares of Class B outstanding. The K-Swiss Board of Directors also approved an increase in the company’s cash dividend effective with the second quarter dividend. On a post-split basis, the cash dividend will be increased from the annual rate of $0.03 per share to $0.04 per share. The increased quarterly cash dividend of $0.01 per share will be payable on July 15 to stockholders of record as of June 28.

Granada Hills Nurses Vote to Form a Union Hospitals: Search for qualified medical staff is relentless. By JACQUELINE FOX Staff Reporter Nurses in fact, the entire staff at Granada Hills Community Hospital are the most recent health care workers at a Valley facility to catch the union fever, spurred by a swelling nursing shortage at hospitals here and across the country. All 450 employees at Granada Hills recently agreed to join the Service Employees International Union, one of the largest and fastest-growing health care unions in the country. That includes nurses, doctors and food service and janitorial workers, all seeking better wages, more benefits and bargaining power on management-related issues. The facility is now one of five hospitals in the Valley with an SEIU-represented health care staff. Staffs at Northridge Hospital Medical Center, Encino/Tarzana Regional Medical Center, Los Robles Regional Medical Center in Thousand Oaks, Pacifica Hospital of the Valley and L.A. County-Olive View Medical Center in Sylmar all have joined the SEIU in the last four years. The 350 RNs at Glendale Memorial Hospital, run by San Francisco-based Catholic Health Care West (CHW), ratified their first contract in November 2001 and are now represented by the SEIU’s largest competitor, the California Nurses Association. Union activity in the health care industry is relatively new: Until a couple of years ago, only 10 percent of the country’s hospital workers were union members. Today the figure is closer to 45 percent. The SEIU represents roughly 755,000 health care workers in California, 110,000 of them nurses. CNA represents roughly 7,500 RNs at 20 hospitals across the state. Many in the industry say unions provide the best medicine for hospitals in competition for a scare commodity nurses and other workers with nearby already-unionized facilities, where wage and benefit packages are more attractive, and workers have a stronger voice on administrative issues. Several Valley hospital administrators declined to discuss any issues involving finances and union contracts. For the most part, hospital officials prefer to hold those cards close to the vest, for fear of losing leverage when contract negotiations come around. Registered nurses at Northridge Medical Center ratified their first contract with the SEIU in April and it seems to be making a difference. Although it’s hard to quantify the impact after such a short period of time, retention and hiring levels are said to be improving significantly. “We’ve never had a bargaining unit here with any of our employees and I think how it’s impacted us is way too early to determine,” said Teddi Grant, vice president of marketing. “I can say that we have been recruiting and retaining nurses at a very high rate for about six months. We brought a nurse recruiter on board who’s brought in 122 nursing staff since the beginning of the year, which is outstanding. We’ve also seen our attrition rate go from about 23 percent to about 13 percent.” Prior to joining the SEIU, nurse salaries at Northridge were based on years of service and level of education. That’s no longer the case. Newly hired nurses at every level can now make $23 an hour. Previously it was $21.50. But it’s not just the union contracts attracting workers. In an effort to address the shortages, union and non-union hospitals alike have been running an aggressive recruitment campaign that often includes signing bonuses and awards for referring new hires. In addition, many hospitals are also putting more resources behind continuing education programs for their employees. CHW, for example, recently boosted its tuition reimbursement fees from $1,000 to $3,000 per employee per year. Other programs, such as a long-distance education program, which workers can participate in from home, and increases in pay for overtime, night and weekend shifts are also slowly being implemented at many facilities. But incentive programs and the constant battle to keep salaries competitive do impact a hospital’s bottom line. And, according to Jim Lott, executive vice president of the Heath Care Association of Southern California, the nursing shortage is still in full throttle and, from his view, unionization has done little to slow it down. “Our association takes a look at retention levels and other employment issues and we see no distinguishable changes between union and non-union facilities,” Lott said. “The turnover rate in Southern California is about 21 percent and we actually see higher numbers of turnover rates at union hospitals because they are drawn to other facilities offering better packages.” Lott said nurses in Southern California are receiving average annual wage increases of about 8 percent, compared to the average of 5 percent for most other industries, adding, “this is happening with and without the unions.” Salaries for entry-level nurses at most Valley hospitals range between $28 and $31 an hour. Lott said personnel expenses now amount to roughly 62 percent of a hospital’s budget and that is increasing by an average 2 to 6 percent each year. “What this means is you have hospitals running to fill vacancies while also trying to cope with the constant competition from other facilities,” Lott said. And, from workers themselves. On May 30, California Nursing Association members at every CHW hospital across the state, including Glendale Memorial, organized a one-day picket march to push for changes to their contracts. According to David Johnson, CNA Southern California regional manager, his members want CHW to bring wages and pension contributions into line with larger facilities, such as UCLA Medical Center. He said the contract Glendale Memorial and the union negotiated in 2001 set wages for entry-level nurses at about $28 an hour, while the pay at UCLA is closer to $30 an hour. “The nursing shortage has increased since we ratified our contract at Glendale Memorial, and the bar has gone up,” Johnson said. Mark Klein, vice president of corporate communications for CHW, declined to discuss ongoing negotiations with the union. “Nurses represent the very core of our caregiving, and in the last year we’ve signed 17 contracts with the CNA,” said Klein. “We are now in discussion with them about these things and I’d prefer not to speculate.” Also at issue at Glendale Memorial and other facilities are nurse-patient ratios. In January, Gov. Gray Davis passed new statewide guidelines, but they have yet to be fully implemented and, according to the CNA’s Johnson, it could be a year before they are. His union is also pushing for CHW facilities to begin following the guidelines now. Like many RNs who have unionized, Joanne Shaw, who has worked at Granada Hills Hospital for 13 years, said she and her colleagues agreed to join the union in order to negotiate for better wages and benefits. “We’ve always been like a family here,” said Shaw. “But over the last several years we felt we were let down by management. We haven’t had pay increases for five years and had our pay cut in the late 1990s.” But at the top of her list of concerns are nurse-patient ratios, which have dropped to such low levels at Granada Hills, she said, that nurses from one department were often floated to another to fill in, even if they lacked experience and or certification to perform the additional work. “Several times I felt like my license was in jeopardy,” Shaw said. Repeated calls to Granada Hills representatives went unreturned. The nurse-patient ratios would vary for different departments. For example, the ratio would be at least one nurse for every four patients in emergency rooms, and one nurse for every five patients in medical and surgical units. Shaw said Granada Hills workers will spend the next few weeks electing bargaining representatives and preparing contract terms to present to administrators. She declined to say whether she was a candidate. In the meantime, the union war will go on. Lisa Hubbard, a spokesperson for the SEIU Local 399, said other Valley hospital workers are ready to negotiate. Which ones, she would not say. “Our biggest challenge is having enough time to get to everyone,” Hubbard said. “There are nurses and other staffers at hospitals across the San Fernando Valley waiting like planes on a runway to go through the steps of forming the union.”

BTAC Members Have One More Tax Reform Proposal Politics by Jacqueline Fox Members of the Business Tax Advisory Committee (BTAC) have come up with four options for replacing the city’s Gross Receipts Tax and plan to huddle May 13 to pick at least one to pass on to the Los Angeles City Council. This is great news for business owners who’ve long pushed for changes to the city’s tax structure. That includes the folks at the Valley Industry and Commerce Association, which launched an aggressive “ax the tax” campaign earlier this year and managed to even get Mayor Jim Hahn to throw his weight behind a reform effort. “We came up with 10 or 11 ideas for replacing the tax. Then we broke it down to about four, two of which will probably be the dominant choices,” said BTAC member Marv Selter. Under the current system, all businesses are required to pay taxes on their gross receipts, regardless of whether they make a profit. Not only does that system create a lopsided playing field for businesses, particularly small ones, it provides absolutely no incentive for larger companies to set up shop here since they need only jump the Glendale border to get out of that fiscal booby trap. Meanwhile, enforcement of the tax has been so shiftless, it’s estimated roughly 40 percent of the business owners in the city haven’t been paying it. So BTAC’s mission? Offer the council an alternative that is fair to business owners, provides an incentive to attract new companies and have it come with some kind of built-in mechanism for tracking down tax scofflaws. Here are the four proposals: – The CCR Tax: That’s Collect, Cut and Rebate. The tax would continue to be collected, but the $17 million collected through the tax amnesty program last year and anticipated funds from other programs would allow the city to cut taxes and offer rebates to those who have been paying and continue to do so. – The Flat Tax: Pretty straightforward; would be set up in tiers with several different levels for either categories of industry or the size of the company. – The Combo Tax: This is essentially the same system in place now but, under reforms, would offer business owners more than one tax code to file under and a lower number of business categories. For example: a business with more than one service could use gross receipt numbers from the lowest revenue-producing unit of the company, rather than be forced to pay a percentage of combined revenues from all units. – The Rent Tax: This would be based on the rent of the building in which the business is set up. The landlord would collect the tax and then remit it to the city. If the business owner also owns the building, the tax would be based on surrounding rents. The same would go for home-based businesses. According to Selter, the rent tax plan is likely to emerge as one of the top two and, frankly, it’s easy to see why. The system would automatically catch tax scofflaws because most business owners pay rent on their facilities. It’s also a fair system because those business owners that can afford high-rent districts would be charged more than those who operate in lower-rent districts. And, the system provides a real incentive to businesses outside the city, not only to come on over, but maybe consider setting up a business in areas with lower rents, where commercial activity is needed most, like the Northeast Valley. Naturally, the city council could reject all four proposals when it finally gets them. Meanwhile, Selter said the city and the state franchise tax board have finally gotten around to creating the software program that would allow the two to share data with one another. The plan there, drafted under measure AB63 in 2001, would allow the tax board to share filing information with the city so it can do a better job of tracking the businesses up and running and who’s paying their taxes and who isn’t. Because of budget cuts at City Hall, rumor has it that the city has had a tough time coming up with money to train employees to work the AB63 program. Selter said the program is now expected to be up and running by 2003. Lot of Nothing The Ford Motor Company has taken an 8.14-acre chunk of land in Burbank off the market again in an apparent effort to bring in a dealership, which would be music to the ears of city officials who’ve fought tooth and nail to get an auto dealer in town and give nearby Brand Boulevard of Cars a run for its money. The land on Front Street, known as the Zero Property, is next to the freeway and roughly four acres of city-owned property. Ford once cut a deal with Galpin Motors owner Burt Boeckmann to bring in a dealership, and the city was willing to toss in $12 million to sweeten the deal. When that deal fell through, Ford took the property off the market. It then began looking for a large retailer or hotel to sell to, but it also faced an uphill battle with the city council, which would have had to approve a zone change from automotive in order for a retailer to come in. Both Wal-Mart Stores Inc. and Sam’s Club Warehouse were said to be talking with the city and Ford representatives last fall but, according to John Clinard, a Ford spokesman, “We just didn’t get any suitable offers.” Maybe it was the price tag: Ford wants $15 million for the land. Regardless, it’s once again up in the air whether Ford will allow one of its own dealers to move in or offer the land to a competitor. The first option is tricky because apparently Boeckmann managed to get Ford to agree not to let a competing Ford dealer come in should his deal fall through. It’s not likely Ford is going to sell to a competitor, so the only other two options are to let the land sit, or ask for a zone change and try again in a year or two to sell to a non-automotive retailer when the market improves. Letting it sit is a bad idea: it’s estimated monthly maintenance of the land costs Ford about $35,000. Meanwhile, the city has sent a letter to Ford asking it to clean up the site and tear down the dilapidated building on the property. The city is also asking Ford to move quickly on its plans and, if the company hasn’t yet decided whether to bring in an auto dealer, it may sell its four acres to a competitor. Jacqueline Fox is politics reporter for the San Fernando Valley Business Journal. She can be reached by e-mail at [email protected].

The Briefing: THE BOSS’ MANAGEMENT STRATEGY Computer sales are down. Ditto for the telecom industry. These days, if you are in a business that sells or services the tech industry, there is bad news at every turn, and chances are those headlines are hitting straight at the morale of your workforce. So what’s a manager to do? That is the question Business Journal Senior Reporter Shelly Garcia posed to Jack Poe, chairman and CEO of Camarillo-based Semtech Corp., makers of semiconductors. Semtech, in its most recent quarter ended April 28, posted its third consecutive increase in net sales and after-tax profit margin. But like most in the industry, the company’s revenues and earnings declined over the comparable period last year. And, like its peers, it is inundated almost daily with reports of layoffs, losses and cloudy prospects in the industry overall. Keeping morale up, says Poe, is not a sometime thing. It happens over the long term as a result of consistent policies and practices. “The strength of this company is based on intellectual property and people bringing intellectual property. The ability to recruit, maintain and motivate people is very important. “We have, of course, varied financial incentives that we’ve utilized, but there’s a number of other things. Part of it is building the team work environment and part of it is to create a financial model where the company does quite well. “We only have 600 employees total, and in our Camarillo location a couple hundred, so it still is a fairly small company. We know each other personally, and we do things as part of a group with the company. I think when you have that kind of relationship among employees, and between management and employees, I think that helps you get through some of the more difficult times this industry has seen in the last 18 months. “We’re going to have an open house at our building we just moved into a new building for friends and family of employees so they can show them where they work and give them some idea of what they do all day. We have picnics. “One thing we do have is quarterly meetings with all employees to go over results and talk about our key objectives and keep them abreast of the market conditions as we see them, so they kind of get a flavor for what’s going on. “Our turnover rate has been extremely low, 1 or 2 percent.”