Upstart Brokerage Pins Its Future on Thinking Small Real Estate by Shelly Garcia A few years ago, much of the real estate industry began embracing the bigger-is-better theory of management, and the urge to merge saw local real estate brokerages gobbled up by regional ones and regional firms absorbed into national companies. There’s a lot to be said for national clout, but now one company is hoping it can find opportunity in what those coast-to-coast behemoths have left behind. Tom McAndrews, founder and president of Tiarna Real Estate Services, figures that what the nationals can’t do is provide services exclusively for one side of the real estate transaction, and he set up the company with the express purpose of serving the needs of landlords and property managers. Two-year-old Tiarna launched with four locations Newport Beach, Scottsdale, Ariz., Oakland and Encino but, except for Newport Beach, the offices were engaged only in property management. That changed several weeks ago. McAndrews recruited two Daum Real Estate Services brokers to the company’s San Fernando Valley office and, with the addition, the unit has expanded into leasing services as well. Paulette Toumazos and Angie Weber have joined Tiarna as vice presidents in the Encino office, which now manages about 350,000 square feet of space throughout the San Fernando Valley. The partners, who also represented landlords at Daum, brought with them listing contracts for about half that space. Tiarna manages a combined total of 3.4 million square feet of mostly office and industrial space throughout its branches. That is small by most standards, and small real estate companies have not enjoyed a great deal of success recently competing in an arena filled with national players. But McAndrews believes that specializing on the landlord side will help the company go up against those larger firms. “A company that does both (landlord and tenant representation) still has a potential conflict,” he said. “Our business somewhat eliminates that conflict.” When a brokerage represents tenants and landlords, brokers will show a client many space options, often including among them space owned by a company that is also a client. It is not uncommon for the same brokerage to represent tenants and landlords in lease negotiations either. Some owners shrug off the conflict, noting that it is the nature of the real estate industry. But McAndrews says that in conversations with institutional owners pension funds, banks, etc. those investors indicated they would prefer to work with an agency that represented landlords exclusively. “There was a big consolidation in the mid- to late ’90s, and it took out many of the good regional competitors,” McAndrews said. “So listening to clients saying we’d like a management brokerage team to work together with us, as well as the elimination of competition, created a void or a niche that I think we can fill.” McAndrews, who spent about 18 years with Charles Dunn Real Estate Services, eventually as head of the company in Los Angeles, said that, unlike national tenants who often prefer to work with one brokerage company with offices in multiple locations, institutional landlords prefer to have different representatives in each region in which they operate. “Most institutional landlords aren’t willing to put all their eggs in one basket,” said McAndrews. “It’s too risky. If the company makes a mistake on a portfolio or raises its prices, the landlords have no one to fall back on that is familiar with their requirements.” While these types of owners won’t work with a company that has a single location, they are willing to contract with a firm with multiple locations in a region. That thinking led McAndrews to set up four locations for the firm, he said. So far, only about 10 percent of Tiarna’s revenues come from leasing, but McAndrews hopes to raise that ratio to about 50 percent as the offices grow. Kearny Steps into Warner Center Deal Kearny Real Estate Co., a Los Angeles-based division of Morgan Stanley Real Estate Funds, has reportedly jumped into the void left by the withdrawal of The Voit Cos. to become the second bidder for Warner Center Properties. Kearny is going after the low-rise segment of the portfolio, which includes 15 properties. The purchase price is believed to be about $63 million. The second bidder, Douglas, Emmett & Co., is negotiating for the high-rise portion of the 2.3-million-square-foot property, owned under a joint venture by Alaska Permanent Fund Corp. and Harvard University’s endowment fund. Voit officials said they were forced to lower their bid after new information about additional costs came to light. That sent the owners back to the drawing board to select another bidder for the property. Bertelsmann Expands Sares-Regis Group has leased a newly constructed Valencia building to Bertelsmann Services Inc. The 142,141-square-foot industrial facility, at 29011 Commerce Center Drive in the Valencia Commerce Center, is the company’s fifth facility in the Valencia area. Bertelsmann Services, a unit of German conglomerate Bertelsmann AG, handles customer relations management, commercial printing and other services in the Valencia area. Terms of the lease were not disclosed. Developer Sares-Regis completed construction of the building last year. Doug Sonderegger and Craig Peters, brokers with CB Richard Ellis, represented Sares-Regis. Bruce Powell and Tim Crissman, of Crissman Commercial Services, represented the tenant. Coldwell Banker Goes West Coldwell Banker Residential Brokerage, Greater Los Angeles Co. acquired Coldwell Banker Town & Country, a Ventura County brokerage with offices in Camarillo, Mission Oaks, Oxnard, Thousand Oaks, Ventura and Ventura Beach. The Town & Country unit employs about 140 sales associates. Senior reporter Shelly Garcia can be reached at 818 676-1750, ext. 14 or by e-mail at [email protected].

Prop Q: A Bad Way to Spend Good Taxpayer Money Guest Column – Walter N. Prince On March 5, Valley voters will be asked to pass Proposition Q, a $600 million pork barrel masquerading as a “public safety” construction bond. Nobody denies that it would be nice to provide roomier facilities and new desks for our overworked police force, but construction of 11 buildings certainly is not a “public safety” issue. And a financial peek at Proposition Q reveals that it definitely is not the way to get new police facilities built in the most efficient manner. First, the $600 million bond issue will actually cost taxpayers $1.2 billion by the time interest is paid over the 24-year life of the bonds. The average yearly cost thus will be $50 million. Next, only $195 million is actually earmarked for construction of the two new police stations and nine replacement buildings. The rest of the bond funds will be spent for land ($78 million), architects ($37 million), new furniture and equipment ($46 million), city administration and oversight ($65 million), and the inevitable city slush fund for unforeseen contingencies and inflation ($140 million). There is also the matter of long-term additional charges against the city’s General Fund. The city will have to find $4.5 million in its current operating budget to pay up-front costs not eligible for bond reimbursement. In addition, the implementation of Mayor James Hahn’s compressed work week for police officers will cost the city a minimum of $16 million more next year. And if the bonds pass, it will cost the city an additional $30 million each year to operate and maintain the new facilities. This in a time when the city has already admitted it will be $250 million in the red during the coming year. If the city is really concerned about “public safety” issues, it makes a lot more sense to spend the $30 million per year for more police officers. At the current annual cost of $91,000 each, the city could add 330 more officers instead of spending $30 million to maintain the new buildings. As for the Valley’s piece of the bond pie, the city says it will tear down and replace the West Valley station, will move some administrative and traffic functions to the old General Motors site in Van Nuys, will give us a bomb squad facility with an explosives-testing range, and will build us a new police station. The city has not identified the locations for the bomb-testing range or the new police station, and those of us with long memories will recall that we passed a 1989 bond measure (Proposition 2, for $176 million) that promised us a new North Valley station that has never been built. Total Valley construction under Proposition Q will be only $45 million of the $1.2 billion payback. Since Valley property owners pay 36.56 percent of all the city’s bond issues, they will wind up spending $439 million for the $45 million worth of buildings promised to us, which is not the way most of us invest our money. Proposition Q is an insult to the taxpayers, and Valley voters should make that fact very clear to City Hall on March 5. Walter N. Prince is a director of the Northridge/Porter Ranch Chamber of Commerce and chairman of its government affairs division.

From the Mouths of Babes: Economics 101 By MICHAEL HART Staff Reporter The homework assignment dovetailed beautifully with the lesson plan in a fifth-grade class at Kester Avenue Elementary School in Van Nuys one day last month. The assignment had been to do some price comparisons at the grocery store. Anna Treybich dutifully reported that Ralphs’ version of Cocoa Puffs was a better deal than General Mills’. Kirby Shaw noted that a roll of Bounty paper towels was $1.39 while Ralphs’ brand, Green Forest, was $1.19. With that bit of real-life experience under their belts, it wasn’t hard for their teacher, Mel Kohn, to lead them gently to the conclusion that Vons’ creamy peanut butter was preferable to Jiff’s, even after they’d passed samples of the two around, noting the color, label and price. In fact, a show of hands revealed that 23 of Kohn’s students would rather buy Vons’ brand while only three were willing to pay a little more for Jiff’s. The classroom exercise in shopping habits was a bit of a break from the kinds of subjects fifth-graders spend the bulk of their time on. That, however, wasn’t the only unusual thing about it: Kohn isn’t really a fifth-grade teacher. He’s an accountant, a partner in the Encino firm of Kirsch Kohn & Bridge LLP, only moonlighting briefly in the classroom. Kohn and several of the associates at his firm have taken on a program called KiddAccounts that puts them in elementary schools from time to time with a series of classes designed to help children begin managing their finances early. “It ties in to what we do in our company anyway,” said Kohn of what he views as the kind of thing accountants should be doing: community service related to their profession. The accountants at Kirsch Kohn & Bridge have a three-part course on money management for elementary-school age kids. The point, Kohn said, is to get them started thinking early that there are other things to do with their money besides simply spend it. “They’re really just going through the beginnings of financial planning,” Kohn said, “which is learning how to allocate your funds.” In their first appearance in the Kester Avenue school, Kohn and his colleagues talked about the different ways students could divide up their dollars: by saving them, giving them away or, of course, spending them. In the second session the class’ regular teacher re-emphasized the concept of saving and finally the accountants returned to talk to students about spending. The essentials of KiddAccounts were hammered out seven years ago by partners at a Santa Rosa accounting firm, Linkenheimer LLP, who were looking both for a new way to market themselves and a community service project that was somehow relevant to what they were doing in their professional lives. Steve Miksis, CPA and a manager with Linkenheimer, took the lead and found the program did both: it satisfied his desire to help others and it managed to provoke enough local media attention that his firm wound up with a few new clients it might not have otherwise snagged. Next, he developed a slick-looking curriculum including a character called Lester Lynx and began licensing it to other accounting firms like Kohn’s. Initial licensing fees run from $1,000 to $3,500 with annual renewals in the area of $250 to $875, depending on how involved the accounting firms get. Kohn learned about the Santa Rosa project and, after being principal for a day at Encino Elementary, talked that school’s real principal into letting him try it there. That led to a small mention in the L.A. Daily News, which in turn led to the gig at Kester Avenue. “It’s a piece that maybe in school we don’t always address,” said Kester Avenue principal Sandi Barrett, “how to spend money and how to save it.” And, since kids in the United States between the ages of 6 and 12 spend about $24 billion every year, it’s a piece that’s worth considering. Apparently it’s not just the cereal and peanut butter makers, video game developers and toy manufacturers that know about that figure either. Banks are tailoring accounts and products for children and dozens of companies now market financial management curricula on the Internet similar to Linkenheimer’s. In 1996, the California State Legislature mandated that all students have at least a semester of money management before they graduate from high school. That mandate was not accompanied by funding or penalties for non-compliance, so school districts have not exactly rushed to recruit economics teachers for the elementary school-age crowd. But there have been inroads, according to Paul Richard, executive director of the San Diego-based Institute of Consumer Financial Education. “It’s been 20 years of work to get into the schools to show kids that these issues have an impact on their lives,” Richard said. “Parents don’t always do it because they’re not confident of their own ability to manage their money. The consequences of not doing it is that there’s just an awful lot of debt out there and an awful lot of bankruptcies right now.” Washington Mutual Bank recently opened the latest of a series of retail outlets at its Encino branch called the Pig Store, featuring a mascot called Pixie Pig, with books, games, backpacks and, yes, piggy banks all with the intention of drawing young customers and their parents. It also has a program that offers savings accounts for students at some Valley schools that allows them to make deposits or withdrawals on their own campuses. Christine Campbell, Washington Mutual’s West Valley regional manager, said, “If you look out there, we find a lot of our customers who don’t know how to save, maybe don’t even know how to balance a checkbook. “If we can help some of them become better educated, they’ll be better savers when they grow up.” And in the short term, she said, “We don’t track this directly, but parents do bring their kids in to the Pig Stores. So we got some business from the parents because of it. And, of course, a lot of the kids end up staying with us as they become grown-ups.” Back at Kester Elementary, the price comparison lesson had gotten a little more complicated. Kohn passed around bottles of Heinz Ketchup and Vons catsup. The spelling wasn’t the only distinguishing element. One student noted Heinz had 15 calories per serving while Vons had 20. Another realized an apples-to-apples comparison would be out of the question this time since the Heinz bottle had 40 ounces and Vons only 36. Chloe Wright looked very closely at both labels and announced that, with Heinz, “If you don’t like it, you can get your money back.” The ever-watchful Anna Treybich saw that, according to the Heinz label, “The company’s been around since 1869.” Everybody then looked, without success, to see if there was any indication as to when Vons had been founded. In the end, the vote was Heinz 22, Vons 4. The clincher? Heinz, even if it costs more, offers a deal on a Grinch watch if you mail in a coupon. Kohn said, “They’re trying to get your $24 billion, aren’t they?”

Clinic Works Out Deal to Move Into Its Own Building By CARLOS MARTINEZ Staff Reporter Demonstrating financial savvy unusual in the world of nonprofits, the Valley Community Clinic pulled off a deal last month that allows it to acquire its own $5.5 million building in North Hollywood. “We were lucky in some ways because we ran around and just patched this funding together,” said Ann Britt, the clinic’s CEO and president. The clinic closed its purchase of the $5.5 million building at 6801 N. Coldwater Canyon Blvd. on Jan. 31 after nearly four months of wrangling with banks, the city and building owners. In August, the nonprofit approached Trol Realty LLC, a group of investors that included doctors who sometimes volunteer at the clinic, about the 43,600-square-foot building it owned. The investors wanted $5.5 million, or about $2 million less than the appraised value, for the building that had been vacant for three years, Britt said. “We felt very fortunate that we were getting a good deal, but the problem was getting the financing together,” she said. First, the clinic got a $1.5 million federal Community Development Block grant that was contingent upon the nonprofit rustling up the balance of the funding for the acquisition. Britt quickly landed a $1.3 million loan from the city, but it came with a hitch the clinic had until Jan. 31 to use it or the offer was off the table. Meanwhile, on another front, the clinic was running into trouble drumming up interest from commercial banks and time was running out. “It’s common for nonprofits to have a difficult time,” said Brent Wiblin, vice president of Mellon First Business Bank in Encino. “Nonprofits just don’t have a bottom line (profit) and that unnerves banks.” At that point, Britt enlisted the help of the Valley Economic Development Corp., which got the clinic and Mellon close to a final deal on a $2.2 million loan in late December. “They came to us and said, ‘We need you to put together a package, but there’s not that much time,'” Yvette Ibarra, revolving loan program manager for the VEDC, said. With just over a month to beat the city’s deadline on the first loan, the VEDC and bank officials had plenty of details to iron out. “Nonprofits have wild swings,” said Mellon’s Wiblin. “They have a lot of funding or none at all, so it’s hard to make sense of it.” “You just don’t get nonprofits coming in for money to buy a building,” he added. In fact, many of the Valley’s largest nonprofit organizations, including the North Los Angeles County Regional Center and the Child and Family Guidance Center, say they lease their buildings. But with a fundraising drive with a goal of raising $6 million by 2006 and a client base projected to grow from 45,000 last year to 60,000 this year, Mellon finally approved the deal shortly after the first of the year. That still left the clinic $500,000 short of the $5.5 million purchase price. Britt then quickly went back to the city for a second grant of about $200,000, wrangled another $200,000 grant from the California Primary Care Assn. and talked the sellers into giving the clinic a $50,000 line of credit. The final $50,000 the clinic scraped together from friends and its own cash reserves. The two-story structure on Coldwater Canyon was built in 1984 for Cigna Health Care and was acquired by Friendly Hills Medical Group in the mid-1990s. In 1999, Friendly Hills filed for bankruptcy and abandoned the building. According to county tax records, the building is valued at $7.7 million. “We were in need of a new building for a while,” said clinic spokeswoman Judi Rose. “We were turning away 200 to 300 patients a year because of overcrowding at the clinic.” The clinic will continue to offer dental, pediatric, pre-natal, general health care, eye care and other services at its new facility. It also expects to increase its staff of about 110 people by about 40 by the end of the year, Britt said. “We’re going to ramp up and expand our services to meet the need,” she said.

Newsmakers Advertising Rich Contino, formerly a manager of client services for Mercury Media, has assumed the role of director of client services for Inter/Media in Encino. Leili Nassiri, formerly an associate account director with Inter/Media, has been promoted to associate planning director. Agriculture Jim Padden has been named vice president and chief operating officer for Sunkist Growers Inc. of Sherman Oaks. Padden will concentrate on streamlining the day-to-day operations of the company, focusing on implementing efficiencies and customer-focused initiatives. Padden comes to Sunkist from FJ Foodservice Inc., a meat business he helped to found and where he served as president. Prior to his work with FJ Foodservice, he served as general manager of Young’s Market Company, which was sold to Con Agra. Engineering Hall & Foreman Inc. has named Jess Harris director of community planning at its Los Angeles office, located in Chatsworth. He will be responsible for the firm’s land planning division. Harris is currently involved in re-planning a 1,000-acre mixed-use community for Intex Properties in the Inland Empire and was responsible for land planning and entitlements for the 1,400-acre Village of Heritage in Fontana. Health Care Sheldon Baker is now chairman of the Glendale Memorial Health Foundation. Baker, a senior partner at Baker, Olson, LeCroy & Danielian in Glendale, was mayor of Glendale from 1996 to 1997. The Glendale Memorial Health Foundation raises funds for Glendale Memorial Hospital. George Lewis has been named general vice president of Glendale Adventist Medical Center. Lewis will be responsible for oversight of cardiac and diagnostic services, patient access services and residency programs. Previously, Lewis was chief operating officer of California Specialty Hospital in Northern California. Information Services J.D. Power and Associates of Agoura Hills has named David Sunker chief information officer. He will identify areas where technology can improve profitability, products and services. Previously, Sunker was vice president and CIO for Danone Waters of North America. Law Fathia Macauley has been named director of development for Neighborhood Legal Services of Los Angeles County where she will be responsible for fundraising and program development. Most recently, Macauley was a member of Mayor Richard Riordan’s Business Team, headed by former Deputy Mayor and current City Attorney Rocky Delgadillo. She previously served as senior lending officer for Century Housing Corporation and director of housing development for Beyond Shelter. NLS has been providing legal services for low-income people in the San Fernando, Santa Clarita and Antelope valleys since 1965, and expanded into the San Gabriel and Pomona valleys in 2001. Organizations The Woodland Hills Chamber of Commerce has given Michael Miller the Joseph Staller Memorial Award for Excellence in Service. Miller, an agent with State Farm Insurance, is president of the Fernando Awards, an advisory board member of the Encino-Tarzana Regional Medical Center and board member of the Warner Center Heart Run. Real Estate TitleTemps Inc. has appointed David A. Mosesson chief financial officer and promoted Roger Iris to senior vice president of operations. Prior to joining TitleTemps, Mosesson was a senior vice president at Countrywide Home Loans and had served as director of finance for Computer Sciences Corp. His experience also includes a five-year stint with KPMG Peat Marwick as director of finance and accounting for the Pacific Southwest region. Iris joined TitleTemps in 1999. Having overseen the opening of 10 new branch offices throughout the country, Iris is currently managing four regional managers in the field and is responsible for the overall performance of 23 field offices. Prior to joining TitleTemps, Iris served as a regional manager for several leading title companies, including Chicago Title, Fidelity National Title, Ticor Title, North American Title and United Title of California. Technology RiverOne Inc. has named Bahram Nour-Omid chairman of its board of directors. Nour-Omid is currently a senior principal of Shelter Capital Partners, a Los Angeles-based venture capital fund focusing on companies in the enterprise application, semiconductor and wireless/communications industries. An early and repeat investor in RiverOne, Nour-Omid has also been a key advisor to the company’s management team since 1999. Nour-Omid was founder and chief executive officer of StudioXchange Inc., a developer of procurement software for the film and production industries. He also served as executive vice president and a director of Essentus Inc.

Letters to the Editor Real Estate Awards Dear Editor: Thanks to the San Fernando Valley Business Journal for hosting the 2001 Real Estate Awards Event recently. The Business Journal does a great service to our industry in not only the coverage of the area’s commercial real estate market but also providing such a forum for our industry. The various agents and brokers honored at the event were among the best and most professional in our industry and the coverage they received in your paper was well deserved. Thanks again for your paper’s active coverage and participation in the San Fernando Valley’s commercial real estate market. William R. Boyd Jr. Grubb & Ellis Los Angeles

DIC Cuts Deal on Icon of ’80s, Strawberry Shortcake Media & Technology by Carlos Martinez The 1980s-era greeting card character Strawberry Shortcake is making a comeback with a licensing deal reached between Burbank-based animation studio DIC Entertainment and Cleveland-based American Greetings Inc. The deal, valued at about $1 million, according to one source, calls for DIC to produce four direct-to-video shorts featuring the little girl with a red dress, a white apron and a bonnet with red polka dots. She was first featured in a popular line of greeting cards by American Greetings in 1981. Melissa Bomes, executive vice president for DIC, said the company hopes to capitalize on the popularity of the character which began as an ongoing character in greeting cards before expanding into other products like dolls, mugs and plates. American Greetings said the character has generated about $1.2 billion in sales to date and about $100 million in its first year. Japan-based Bandai, which has a toy licensing pact for Power Rangers, Gundam Wing and others, will be the primary toy licensee for Strawberry Shortcake. DIC President Brad Brooks said the deal marks the start of a new relationship with American Greetings, giving the animation studio the opportunity to license other greeting card characters for animated shows. Silverman Returns to Film Roman Too Burbank-based Film Roman Studios made news recently when it brought back company founder Phil Roman, but Roman isn’t the only one returning to the fold. Former “The Simpsons” director David Silverman also agreed to return to the studio. It’s all part of an effort to bring some needed clout to a studio that has been hurt by the decline in the number of network deals handed to independent studios. Fred Price, a Studio City-based talent agent, said bringing back Silverman will be a plus for the studio when it comes to pitching projects to the networks. “It always helps to get someone who is hot,” he said referring to Silverman, who directed last year’s popular animated film “Monsters Inc.” for Pixar Animation Studios. Through last week, the film had grossed $252.2 million in four months of its release. Silverman left Film Roman in 1999 to direct “Monsters,” “The Road to El Dorado” and other animated projects. He is also scheduled to direct Universal Studios’ “Curious George,” featuring a computer-generated version of the famed chimpanzee. Silverman said he hopes to begin where he left off with “The Simpsons,” contributing to other projects on the Film Roman slate as well. “It’s a tough market out there with the networks in general, but I hope that I can contribute to the studio,” he said, referring to the networks’ recent habit of purchasing projects from network-owned production companies rather than from independents to save money. The 41-year-old Silverman said he hopes to develop other projects for Film Roman that involve computer-generated animation, similar to “Monsters.” “Animation has changed a lot in just the past few years and you really have to get away from the old way of doing things,” he said. But returning to “The Simpsons” will be easy, said the UCLA graduate. “It’s a great show that just keeps its edge and just keeps on going,” he said. “I love working on that show.” As one of the early animators on the show in 1988, Silverman recalled how the character drawings were constantly improved upon by eliminating the jagged edges of their mouths, for instance, making them more natural. “They looked a little crude at first, but they got better.” DVDPlanet Goes Yahoo! Chatsworth-based Image Entertainment Inc. officials say they have high hopes of improving revenue figures for its online DVD retail business, DVDPlanet.com, after signing a number of new agreements to distribute DVDs through the Yahoo! Inc. web portal. Ken Crane Jr., DVDPlanet vice president, said the online retailer could increase sales by as much as $1 million through a deal with Yahoo Shopping which will help distribute the DVDs through its portal, under the DVDPlanet moniker. In the quarter ending Dec. 31, DVDPlanet reported $5.6 million in revenue, compared to $4.3 million in revenue a year earlier. Profit figures were not disclosed, though the company reported the unit had a 17-percent profit margin. “Yahoo Shopping should have a strong impact on overall Planet sales. There are millions of new DVD owners who will be much more effectively targeted,” he said. The move, Crane said, will help push the company toward sustained growth. In 2001, the company reported net income of $8.4 million on revenues of $100.8 million, up from $1.4 million in net income on $83.7 million in revenue in 2000. Boeing Nets Air Force Contract The Boeing Co.’s Rocketdyne Power and Propulsion unit in Canoga Park has been awarded a $17.5 million contract with the U.S. Air Force to provide equipment and technologies for the development of multi-use rocket engines for NASA, the company said. The contract calls for the company to work at the Air Force Research Laboratory and Propulsion Directorate-West at Edwards Air Force Base in Palmdale. Other details were not disclosed. The work is scheduled to be completed by January 2004. Staff reporter Carlos Martinez can be reached (818) 676-1750 ext. 17 or by e-mail at [email protected].

A Greek Form of Survival Rochie’s Greek Row has survived earthquake and personal tragedy as it outfits fraternities and sororities at Cal State Northridge and other universities By JACQUELINE FOX Staff Reporter Most of the damage from the 1994 Northridge earthquake that you could see has been repaired, but one local business has only recently begun to recover from the financial impact of the 6.7 tremor. Rochie’s Greek Row, which designs custom-made apparel and novelty items for fraternities and sororities, mostly for those at Cal State Northridge, is located in a 1970s-era strip mall just a stone’s throw from the apartment building in Northridge that collapsed in the quake and accounted for the greatest human loss and tragedy. The mall and many of the surrounding businesses suffered significant damage as well; most tenants have traversed a difficult road to recovery since. But for Rochie’s, that road has included enough personal tragedy that, were it not for strong customer loyalty and personal resolve, it likely would have forced its owners to shut the doors for good. Rochanak “Rochie” Saberzadeh started the company she called Greek Row in 1989 as a 20-year-old Cal State Northridge student. Her goal, said her sister Roya (who eventually joined her in the business), was to build awareness on campus of the Greek system and compel her fellow Sigma Kappa sorority members to wear their letters more prominently and proudly. “She started this as a hobby really,” said Saberzadeh of her sister, who was killed in a scuba diving accident off Catalina Island in 1991. The store has since been renamed in Rochie’s honor and a trust fund established to provide financial assistance each year to a needy Northridge student. “The idea of sporting letters back then wasn’t all that popular,” said Saberzadeh. “Greeks didn’t wear their letters or participate as much as they do today, so Rochie was really responsible for bringing new life to the culture on campus. “But she was very into fashion and she came up with designs for her (sorority) sisters that were more creative than what traditional Greeks were wearing in those days, so it just caught on by word of mouth.” These days, the client list includes fraternities and sororities from UCLA, UC Irvine and UC Riverside. But it’s the Cal State Northridge campus that has always been Rochie’s base of operations, which is why the earthquake eight years ago had such a devastating effect on the business. Prior to the quake, annual revenues averaged about $60,000. But subsequent, albeit temporary, class cancellations and disruptions on the Northridge campus left the business without its core customer base for several months. “The earthquake totally devastated the school, so we were literally without customers for a long, long time,” Saberzadeh said. “It’s been a slow road to recovery and we are only just now coming out of it.” Saberzadeh obtained three separate loans from the U.S. Small Business Administration for a total of approximately $100,000. Much of the funding was used to repair in-store damage and replace lost merchandise, which she put in the $40,000 range. In addition, Ivette Ibarra, a revolving loan program manager with the Valley Economic Development Corp., helped Saberzadeh tap funding from the organization’s Northridge Earthquake Disaster Program and later provided her with assistance in purchasing a new embroidery machine. “In Roya’s case, obviously they were very badly hurt because they saw their customer base disappear overnight,” said Ibarra. But the loans also forced Saberzadeh into debt for the first time. That, along with the tasks of building a business back up and coping with personal tragedy, has presented challenges that might have driven another small business right into the ground. “Believe me, the effects from the earthquake have carried on for a long, long time,” said Saberzadeh. “I’ve worked for years now, just to pay off the debt.” But, Saberzadeh said, it wasn’t just the financial assistance that helped her and her company survive. Customers who knew Rochie and strong word of mouth on campus have helped keep the business in a gradual growth mode, despite personal setbacks and for what is such a small company the extremely large debt load. When Alex Lucero first joined Lambda Chi Alpha in the spring of 1995, he got one quick piece of advice. “All my brothers in the fraternity house said go see Roya for great quality for letters and other paraphernalia,” he said. Revenues for Rochie’s in 2001 were $180,000, up from $160,000 in 2000, and Saberzadeh’s projecting they will pass $200,000 this year. The Internet has allowed the company to start booking orders for campus organizations and individuals throughout the nation. There are plans to expand beyond the campus into the corporate boardroom. “I’d like to market to the corporations here, to offer them the same products we do for the Greeks with their company logos,” she said. “This was my sister’s dream,” said Saberzadeh. “It’s the only way that I could find to keep her memory alive. It gives me joy in my heart.” Spotlight Rochie’s Greek Row Core Business: Custom-made clothing and novelties for fraternities and sororities Revenue in 1989: $60,000 Revenue in 2000: $160,000 Employees in 1989: 2 Employees in 2002: 2 Goal: Expand business by going after corporate accounts Driving force: Growing interest in fraternity apparel and novelties

The ‘No’ Campaign Coming to a Chamber Near You Politics by Jacqueline Fox Officials at the Universal City/North Hollywood Chamber of Commerce say James Burkhardt, North Valley area director for Mayor James Hahn’s office, recently asked the chamber’s government affairs committee to persuade the group to recall the full chamber’s earlier vote in support of secession. Committee chairman Larry Blumenstein said Burkhardt told committee members the chamber’s vote in favor of secession was premature and asked them to table the issue until the final terms and conditions are laid out by the Local Agency Formation Commission. The committee tabled Burkhardt’s request, but the visit has sparked anger among secessionists. Valley VOTE President Jeff Brain accused Hahn of using city staff on city time to campaign against a Valley breakup. “Our position is that, as the mayor of Los Angeles, to have his staff working on taxpayer dollars to implement the goal of his own political action committee, is just wrong and should be stopped,” Brain said. “I think this is going to get them in trouble down the road.” Julie Wong, Hahn’s communications director, said Burkhardt’s visit was simply an outreach effort by the mayor’s office to, among other things, talk about the pros and cons of a breakup and that there was nothing improper about it. “What has been happening since the beginning is we wanted to be more proactive in reaching out to members of the community,” Wong said. “Obviously, the chambers are a great way to meet a bunch of business leaders at one time.” In addition to the Universal/NOHO chamber, the Sunland/Tujunga, Filipino- American, Encino, Chatsworth and Northridge chambers of commerce have all adopted positions in favor of Valley secession. $500K for Somebody Else’s Roads Representatives of the San Fernando Valley Transportation Strike Force, chaired by David Fleming and Richard Katz, held a meeting Feb. 26 to tout their accomplishments since formation last year. The good news is that the strike force has lobbied successfully for $820 million in funding for highway, transit and signal programs, despite state budget cuts for other programs. It was also announced that the Strike Force has received a cash infusion of $500,000 from Washington Mutual Bank and that a representative of the bank is now a board member. That’s the same Washington Mutual fighting tooth and nail to get the 3,050-home Ahmanson Ranch project off the ground, and the same Washington Mutual that has yet to satisfy opponents’ requests for a study on how the project would impact traffic along the 101 corridor and nearby surface streets. ‘Yes’ Campaign Begins Carlos Ferreyra, a Valley VOTE board member and one of the chief petitioners of a study on Valley secession, has filed for formation of a political action committee in favor of secession. Residents for Independence, made up of homeowners in the Northeast Valley, is the first organization formed to lobby in favor of a Valley split. Valley VOTE’s board members, led by President Jeff Brain and Chairman Richard Close, have to date said they are neither for nor against secession, but simply want to see the issue go before the voters in November. “We are really the first group that’s going to be putting out the effort to convince people that secession is the way to go,” said Ferreyra, a Valley Glen resident. “The mayor has obviously raised money to fight this issue, and he’s going to get his money from the downtown and special interest groups. Ours will come from the people who actually live here.” The Northeast Valley is reportedly the area where Valley VOTE gathered the largest number of signatures for the initial petition to conduct the secession study. Headed for Takeoff It seems the fans of the Van Nuys Airshow, cancelled this year due to city budget constraints and the impact of Sept. 11, are going to have their time on the tarmac anyway. Deputy Mayor Felipe Fuentes said he’s working with a group of Van Nuys aviators and residents to come up with a plan for what will be called the Van Nuys Aviation Open House. He said the event, tentatively scheduled for late August, will be a scaled-back version of the popular air show held each summer. Los Angeles World Airports (LAWA), the airport’s landlord, has always produced the event and, according to Fuentes, usually spends about $1.2 million to pull it off. He said aviators have long pushed LAWA to reduce the budget and let them get involved in the planning process. Now that LAWA’s piggy bank is busted, it looks like they will get the chance. Fuentes said the group is aiming to produce the one-day event with a budget of around $400,000. Jacqueline Fox is politics reporter for the San Fernando Valley Business Journal. She can be reached at [email protected] or 818-676-1750.

Data Storage Feels the Pain of Tech Slowdown Covey: ‘Companies have pulled back on budgets… shelved products and haven’t deployed new applications.’ By SHELLY GARCIA Senior Reporter A year ago, data storage was the darling of information technology management some estimates projected the category would account for 70 percent of IT spending by 2005. Fast forward to today’s economy and, instead of taking priority over other types of spending, data storage is feeling the same pain as nearly every other IT category. “What I think has happened is that companies have pulled back on budgets, they’ve shelved projects and they haven’t deployed new applications,” said Bob Covey, vice president of marketing for QualStar Corp., a Simi-Valley based provider of automated tape storage solutions. With the corporate march to e-commerce all but ended and the overall recessionary climate still in place, it is no surprise that IT spending has been greatly reduced. But what is so unexpected about the cutback in a sector like data storage is that, unlike the speculative nature of the Internet frenzy, the promised growth in data storage was based on a real and legitimate need for storing, managing and protecting the information that is corporate America’s stock and trade. Add to that the fears raised by the Sept. 11 attacks where protecting data is concerned, and some might expect spending on data storage to escalate enormously. Instead, even industry leaders have seen their stars dim over the past six months. “There is unquestionably a need for increased data storage in the future,” said Robert V. Green, a technology analyst for Briefing.com. “But we’re talking about millions and millions of dollars, and no one has put the budget in place yet. So, while the need is becoming clear, no one has rushed right out to spend the money to do so yet.” With the emergence and advances in Internet technology, the need to manage the sheer volume of data reports, streaming video and audio grew all the more demanding. At the most basic level, companies need to back up data, but ultimately, most businesses and large organizations are moving toward ways to manage data in increasingly complex ways so that it can be saved, accessed and distributed on different systems, and to protect it from loss. The dramatic downturn in IT spending that began last year impacted all sectors of data storage, but some, like disk and tape storage, were hardest hit. “Many companies had already revamped storage and server strategies in and around Y2K and companies had also added capacity in anticipation of the continuing growth we’d seen in 1999 and 2000,” said Covey, at QualStar. “So when business slowed down in 2001, they already had some excess capacity.” QualStar last month reported that for its second quarter ended Dec. 31, revenues declined to $10 million from $15.5 million in the comparable period last year and net income dropped more than 47 percent to $1.2 million or $0.10 per diluted share from $2.3 million or $0.18 per diluted share in the second quarter of fiscal 2001. QualStar had moved to Simi Valley, doubling the size of its facility in anticipation of the growth in the category, about a year ago. But the market changed dramatically since then. Even now, QualStar executives say, the outlook is so uncertain, they are unable to give guidance beyond the third quarter, when they expect sales and income to be flat or slightly higher than second-quarter results. “We’ve seen perhaps the economy hit bottom, but we haven’t seen a robust turnaround, and things aren’t like they were a year ago,” said Bill Gervais, president and CEO of QualStar. “We’re just playing it safe to make sure we’re not promising things we can’t deliver.” Analysts are more sanguine about QualStar’s prospects, but they note the outlook for IT spending continues to be uncertain. “While we believe this guidance is setting the bar low, we are concerned regarding the lack of guidance beyond next quarter,” said Scott P. Sutherland, an analyst with Wedbush Morgan Securities. “IT spending has definitely created a difficult environment to forecast.” Corporate users have scaled back IT budgets dramatically in response both to the downturn in the economy and, in some cases, to the exorbitant expenditures invested in Internet technology that did not yield the expected results. At the same time, much of the hardware-related storage business has become a commodity business subject to intense price pressure. Market researcher International Data Corp. revised its predictions for growth in the hardware segment to just under 4 percent over the next four years, compared to earlier prognostications of a 12-percent annual growth rate. The more sophisticated storage networking segment has not been subject to the same price pressures, but that sector too has softened. “All expectations have come down across all categories of technology, so it’s not growing at the 50-percent to 100-percent growth rates we expected to see coming into calendar ’01,” said Steve Denegri, a managing director at RBC Capital Markets. “While some thought that data storage would circumvent the economic challenges, all segments of technology were affected.” But if the horizon for a recovery in some sectors remains uncertain, prospects are considerably brighter for storage networking, Denegri said. “One of the interesting outcomes of our research since Sept. 11 is the appetite for network storage has increased, primarily because it enables an architecture for disaster recovery.” Indeed, one local company, Troika Networks Inc., has already seen a sharp upturn in business in recent months. “The fourth quarter of last year October, November and December was the best revenue quarter in the history of the company,” said Alan Skidmore, CEO of Westlake Village-based Troika, a provider of fiber-optic storage networking solutions. “Even though managers have had to double check on their purchasing decisions, at the end of the day they’re realizing their data storage requirements are critical and they’ve moved forward on purchasing decisions.” The events of Sept. 11, along with the juggernaut that is the information technology revolution, will lead a rebound across all segments of the data storage business eventually, industry experts say. “Ultimately, once the technology segment starts to come back into favor, the storage group is likely to see the first fruits of the comeback,” said Denegri.