The next time you clean out your garage, don’t expect Goodwill to take all your junk. The longtime nonprofit organization has gone decidedly upscale with its Los Angeles retail stores and the effort is paying off with increasing sales. Attendants armed with lists of do’s and don’ts now scrutinize every donation at some stores as the organization makes a conscious effort to focus on high-quality, newer items that sell better. But bargain hunters beware: the vintage treasures of yesteryear are harder to find. Jarred Cairns, who used to make his living hunting down vintage “one of a kinds” and reselling them, has noticed the new look and higher prices. “Urban Outfitters now looks in some degree like a Goodwill,” the Silver Lake resident said. Of the 26 Goodwill stores in the greater Los Angeles area, 11 have been given a new look with upgraded colors and layouts. Merchandise is now sorted by color and category rather than size, and dressing rooms have been added. In addition, merchandise is shuffled every six weeks, with slower-moving items banished to a clearance center in Lincoln Heights. Two new stores planned to open this year in Sherman Oaks and West Covina will be outfitted with the improvements. It’s obviously not your grandparents’ Goodwill. “Goodwill many years ago had the image of the little boxes in parking lots, where you could just put something in that image has changed,” said Richard Guiss, a spokesman for Goodwill Industries of Southern California. The change is making a difference. Sales at Goodwill stores in the greater Los Angeles area jumped from less than $13 million in 1997 to $17.6 million in 1999. Adele Meyer, executive director for the National Association of Resale and Thrift Shops, said resale and thrift stores have become big business. “The for-profits of the industry have gotten to be very upscale and very profitable, and it has been extending into the nonprofits,” said Meyer, whose organization has 1,000 members nationwide, including Goodwill. The Goodwill store in Portland, Ore., has taken the upscaling to a new level with hip television commercials, a Club Goodwill that offers special discounts, and even a caf & #233; serving gourmet coffee and sandwiches. In the process, it’s become one of the most profitable Goodwill stores in the nation. Guiss said there are no plans any time soon for the Los Angeles stores to mimic the Portland approach, but Goodwill outlets in L.A. and Orange County have teamed up to sponsor radio ads. The downside of all the upscaling is that shoppers who used to find treasures and vintage items buried on Goodwill shelves are no longer patronizing the remodeled stores. Anna Huling, a Los Angeles designer who frequents thrift shops for ideas for her own line of apparel, said it’s harder to find vintage clothing and fabrics at the “new look” Goodwills. Huling has increasingly been turning to Salvation Army stores and even St. Vincent de Paul outlets in funky neighborhoods for retro looks. “In terms of old vintage styles, I don’t see the selections being that great (at Goodwill),” said Huling. “By the time you go to Goodwill you’re not finding the good finds.” Before the change at Goodwill, Huling said the finds were “phenomenal.” One upshot of the increase in sales is that Goodwill is able to employ more people. Because the organization is a nonprofit, revenues go back into training and keeping more people employed. Goodwill Industries of Southern California was founded in 1919 to educate, train and place people with disabilities or other disadvantages into the workplace. The retail operations only account for part of the organization’s revenue stream. Other sources include contract jobs like packaging, shrink wrapping and retail display packaging for other companies.

The future economic wellbeing of Los Angeles County hinges on the success of the growing number of minority-owned businesses located here. Yet a new study shows that minority-owned businesses are still finding it extremely hard to get access to capital, hampering their growth and threatening the region’s long-term economic outlook. The study, published by the Milken Institute in Santa Monica, shows that minority-owned businesses nationwide have been growing at a faster rate than white-owned ones, in terms of both their numbers and revenues. Nevertheless, minority businesses are only getting a fraction of the total amount of money that is loaned to or invested in American businesses. Just 2 percent of all private equity investments in the U.S., for example, went to minority-owned businesses last year, according to the study. If the inability of minority-owned businesses to finance their growth is a potential risk to the future economic strength of the U.S. in general, that risk is even higher in California and particularly in Los Angeles, where there is a larger number of minority-owned businesses than anywhere else in the country. Although the study does not break out data for Los Angeles County, it shows that roughly one-third of all minority-owned businesses in the U.S. are based in California, far more than in any other state. “For Los Angeles specifically, it is not hard to anticipate that the economic importance of minority-owned businesses to have access to capital is greater than elsewhere,” said Glenn Yago, director of capital studies at the Milken Institute and principal author of the study. “Minorities are now in the majority in Los Angeles and they face the same conditions and constraints as nationwide.” Los Angeles County is home to no fewer than 230,025 minority-owned businesses, including self-employed entrepreneurs, according to the 1992 Economic Census (1997 data will not be available until November), with combined annual revenues of $27.9 billion. That represents more than half the minority-owned businesses in California and almost double the number found in the country’s No. 2 city for minority-owned businesses, New York. Although the Milken study found there is a significant gap between minority and non-minority enterprises, when it comes to accessing capital, there are also some significant differences between the type of financing that these businesses are trying to obtain. Venture capital vs. loans “There are two types of capital that are important here,” said Dominic Ng, president of East West Bank in Monrovia. “In the first place, there are the small amounts of capital that are needed to start a business. This is part of the strength of the Los Angeles economy, that immigrant groups have been very self-sufficient in raising money through family and other networks. When it gets to the next stage, however, of raising large amounts of money through traditional sources of public capital, it has been much more difficult for immigrants here.” The situation for minority entrepreneurs in L.A. County might be better than elsewhere in the U.S., according to Ng, in terms of acquiring loans from commercial banks. That’s because there are a fair number of small and mid-sized commercial banks, often with close ties to immigrant communities, that specialize in working with minority businesses. However, when it comes to obtaining equity investments through private placements, minority-owned businesses in Los Angeles are worse off than in some other metropolitan areas because of the absence of investment banks locally. Of 21 U.S. venture capital funds focusing on minority markets that were listed in the Milken study, only one, Bastion Capital Group, is based in Los Angeles. Two others are based in Northern California, and the rest are on the East Coast, in the Midwest or in Texas. The placement seems a bit odd considering that most minority-owned businesses are on the West Coast. “There is a disconnect between supply and demand,” said Ng. “There is an infinite amount of capital floating around and it ends up in the same hands because investment banks don’t know what is out here. Investors tell me all the time, ‘If you can bring me a good deal, I’ve got the money.'” Ng sees a growing opportunity for community-based commercial banks to act as a liaison between investment banks and local minority-owned businesses, providing much-needed access to capital for these companies. Low risk tolerance While gaining access to major investment funds is the issue for some immigrant entrepreneurs, for others, particularly those in the inner city, the problem comes down to qualifying for a small-business loan to stay afloat in the first place. Even though major national banks have become more active in inner-city lending since passage of the Community Reinvestment Act, many fledgling minority businesses still find it hard to pass muster for loans under the standards of these institutions. “The bottom line is that the money is there, but the problem remains that many of these businesses lack the two or three years of experience to qualify for a loan,” said Dominic Pilato, deputy director of the Minority Business Opportunity Committee, which is part of the Mayor’s Office of Economic Development. “We are working with the Federal Reserve and the large financial institutions to develop new and less risky loan products and help them to think outside the box.” Pilato believes, however, that the large banks are slowly developing a taste for lending to minority businesses and that Los Angeles is ahead of other parts of the country in bringing the parties together.

after half a CENTURY, bert boeckmann STILL RULES the largest automobile dealership in the world Bert Boeckmann has been in the car business since 1953, taking Galpin Ford in the San Fernando Valley from a small obscure dealership to the largest in the country with 20,000 vehicles sold annually. He expanded his business empire to include Galpin Lincoln/Mercury in 1988; Saturn of the Valley, the first Saturn dealership in the Valley, in 1990; and Galpin Jaguar in 1995. Currently, he is building a state-of-the-art Lincoln and Jaguar dealership across the street from the Ford dealership in North Hills. Besides running his car dealerships, Boeckmann has been a member of the Los Angeles Police Commission since 1984, first appointed by Mayor Tom Bradley and, after a brief break, reappointed by Mayor Richard Riordan in 1991. Among Boeckmann’s many philanthropic works have been the donation of 80,000 Spanish language books to the USC Library and the funding of Galpin Hall at the Valley Presbyterian School. Question: How is the Firestone tire recall affecting your business? Answer: We’ve been fortunate because I haven’t seen any negative impact on our sales. In fact, what surprised me was that, for the first two weeks after the recall, our sales were up substantially from a year ago. At the same time, it has been a very formidable task to undertake the changing of the tires. Those customers that have a concern want it done immediately and, of course, if you don’t have the inventory to do it, it is pretty difficult to make those changes. However, I think we have a good handle on it now and we prioritize on the basis of whether the customer is going to do any travelling or undertake a long drive. Q: From a marketing perspective, it put a big dent in Ford’s image. A: Unfortunately, it is a dent but, in my mind, Ford acted very responsibly once they recognized what the problem was. We can always be critical and say people should have done this or that, but it is different if you’re trying to determine whether there is a real problem other than those things that are just going to happen and that are beyond anyone’s control. I think Ford acted responsibly in supplying additional tires and in coming to the dealers and saying, “Do for the customers what needs to be done to make sure that they’re handled as well as they possibly can be.” Q: How has the business changed since you started back in the 1950s? A: The biggest change that I have seen is that people want their sales transaction to happen more quickly. When I first started in the business, I might spend nearly a day selling the customer the car, going through the whole process. It was at a very easy pace, it was going to be a major decision about what they were going to spend and so there was no push to want to finalize the deal. In fact, you really developed some wonderful relationships with your customers because you got to know each other quite well. Today, we took a measure on it to find out what people’s thought processes are, and the large majority tells us that, from the time they select their car and sit down to do the deal and settle on a price, they want to drive out in an hour and a half. In the measure, I have had people tell me anything from 30 minutes to eight hours, and I believe that the guy who said eight hours must have been retired. Q: How have things changed for the salespeople? A: The salespeople today have to be more knowledgeable and more accurate in what they say. We have a lot more product than we used to have, and we have a lot more within the product, the cars, than we used to in terms of options. On the other side, what works against them, is that we have a lot more regulation so that means there is a lot more documentation. There is more documentation in buying a car than there is in buying a house. And there are more issues to address. You have not just the sales price of the vehicle but, more often than not, you have the value of the trade-in, you got the financing, you got items like an extended warranty, you have to be sure that he is insured before he drives out of the dealership. So, you have a whole number of issues that you’re dealing in with in a transaction so it is not like buying a TV or anything else.” Q: Are you still closely involved with the day-to-day running of the dealerships? A: I work every day. I’m here five to six days a week, and if I’m not working here on Saturday, I’m normally working at home. I still enjoy it. I arrive at 8 in the morning and leave between 6 and 7 at night. Q: Do you still deal with the customers regularly? A: Oh yes. I’ve got customers that go back four generations. I’ve sold cars to the great-grandfather, the grandfather, the father and the son. From that standpoint, although I don’t necessarily work the deal and don’t go out and demonstrate the car and do all that, we always chat a little bit and usually I oversee the transaction to make sure it goes smoothly for them.” Q: You grew Galpin from a small lot to the biggest in the country. How did you go about that? A: Actually, we’ve been the largest one in the world for the last 10 years. When I started Galpin it was in the city of San Fernando, we had a three-car showroom and were located on an acre and a half of land. We retailed maybe 20 or 25 new cars and around 30 or 35 used cars a month. I started out as a salesman, then I became his manager and then (Galpin) offered me an opportunity to buy into his dealership, which I did over a period of time, and ultimately bought the dealership. Q: Are there any particular business decisions you made that you think of as crucial to your success? A: I’m not sure that I made them or that they weren’t forced on me to a degree. If I’m trying to treat you, the customer, the way I want to be treated myself, and I really do care about you, you’re going to want to come back and do more business with me, and with you comes your family and friends. And as my business grows, if I can continue to do this through the people who work for me, what happens is that I’m forced to expand. And as I expand, I try to say, “What is it that, if I were a customer that comes here, I would want to have when I come to this dealership?” So, we put a restaurant in our dealership, which we’ve had now for 34 years, and the only thing that keeps me from enlarging it is that it would infringe on our parking. Q: Are you concerned about increased competition from online car dealers? A: Well, we’re on the Internet, so we’re pretty familiar with what’s happening. We find that the majority of our customers go to the Internet site for information, but most of the sales are still done at the dealership, and it’s a real advantage to come to the dealership. So often customers find things that they didn’t know existed or colors they like better or whatever it is. Plus, if they have a trade-in, they want that handled. And there is just a difference when you have that relationship within the dealership, because you’re going to come back to it probably for service, and it is nice to have the comfort of coming in and knowing where you’re going and who to talk to. Q: You have been a member of the Los Angeles Police Commission which, in light of the Rampart scandal, has been criticized for not implementing the recommendations of the Christopher Commission. A: People always go back to the same things and talk about them, but most of the time they haven’t taken the time to find the truth. I’m very familiar with the Christopher Commission’s recommendations and I believed in and agreed with most of the recommendations. The key to a lot of the recommendations and any that weren’t implemented usually came down to dollars. They were very costly and the City Council had to agree to spend the money before the commission could do anything. So, if you see any that have not been completed, you have to ask, were they given the money and when were they given the money. Q: Why do you think there is the perception that the Police Commission has not been active enough in addressing the problems with the LAPD? A: One problem that the commission has is that there are many things that we really cannot properly talk about. In fact, in some cases we were told by the city attorney not to talk about them, and that puts us at somewhat of a disadvantage.

No bureaucrat ever got fired because his or her dot-com division had a lackluster quarter. You won’t see division managers at the Department of Labor sweating an IPO. And the friendly folks at the state revenue department have never spent 48 hours straight hammering out code to hit an e-commerce launch date. So it shouldn’t come as a shock that government Web sites have fallen behind commercial pages in terms of utility and user-friendliness. While many companies depend on their sites to attract visitors and keep them clicking, government agencies have little motive to make their Web pages any more inviting than the lobby at the local DMV. Still, it’s disappointing to learn exactly how bad dot-gov sites can be. A new study from Brown University suggests our public servants are having trouble providing even the most basic services Web users have come to expect. Brown’s Taubman Center for Public Policy surveyed 1,813 government sites, including 36 federal government sites, 61 federal court sites and 1,716 state government sites. Researchers were looking for the fundamentals, including contact information, external links, privacy policies and the like. They also evaluated the level of useful services offered online, checked into access for the disabled and looked for multimedia features. Missing the mark The results weren’t pretty. Just 7 percent of the sites posted privacy policies, with state government sites among the chief offenders. While the Federal Trade Commission has chastened private Web sites to disclose their data-collection practices, just one in four of the federal government sites surveyed could claim to do the same. Only 15 percent of government sites offer special access to the disabled, a figure that would be criminal if it applied to government buildings. And barely one in five government sites gives visitors a chance to actually do something, such as filling out a form, requesting a hearing or paying a traffic fine. Just 34 percent of sites posted answers to frequently asked questions. That might not seem like much of an oversight, but most people who visit government sites aren’t there to check out the official seal. They’ve got questions, and probably the same ones the last guy had. Brown researchers may have been setting the bar a bit high in complaining that just 5 percent of the sites included multimedia clips. It shouldn’t be too much to ask for a phone number, though, and nearly one in 10 government sites don’t even post one. This sort of performance doesn’t bode well for those who would have the government enforce privacy rules and other regulations online. If these clowns can’t even post privacy policies on their own sites, how can they expect to keep up with anyone else’s pages? White House follies Even lame commercial sites have left high-level government sites in the dust. Proof of this point is only a typo away, from whitehouse.gov one of the lowest scorers in Brown’s study to whitehouse.com, a porn site. Whitehouse.com has 15 live video feeds, live chat, streaming audio and downloadable movies with “sensual sounds.” White-house.gov offers press releases, a bit of history and some pictures of the house. You can listen to the president’s weekly radio address, but it didn’t seem at all sensual to me. Whitehouse.com has interactive forms and accepts credit card transactions. Whitehouse.gov has lots of information about White House tours but doesn’t let you sign up for one. Whitehouse.com exploits young women in a humiliating sexual fashion. The real White House well, I think we all get the point. There are exceptions, of course. My local county government, for example, did an excellent job of posting last month’s primary election results online as they were being counted. And other agencies have learned that the hard work that goes into providing a service online is ultimately cheaper than conducting that business in person. As for the rest of those glum.govs, someone should figure out a way to introduce them to the market pressures that keep commercial sites on their toes. Maybe federal agencies could compete for funding, with top-rated sites getting more staff and the losers being downgraded to a free page on GeoCities. There’s no way government sites will ever keep up with the best of the Web. But it would be nice if at least the White House had more user-friendly features than the pornographers next door. To contact syndicated columnist Joe Salkowski, you can e-mail him at [email protected] or write to him c/o Tribune Media Services Inc., 435 N. Michigan Ave., Suite 1400, Chicago, IL, 60611.

Following a yearlong search that threatened to remove one of the area’s largest employers and taxpayers from Los Angeles, Health Net has settled on a new home in Warner Center. The HMO has inked a build-to-suit deal for about 288,000 square feet of office space at LNR Warner Center, the former Prudential Insurance of America office complex now being redeveloped by Lennar Partners. The deal, the first for Lennar’s project (Aetna Healthcare is expected to complete lease negotiations shortly), keeps Health Net in an area that has garnered the nickname “HMO Row” because of the concentration of health care companies located there. The deal also retains for the city of Los Angeles a prestigious employer with a workforce of about 2,000. “The fact that they have turned away from other locations that have attempted to lure them says a great deal for the benefits and amenities of Warner Center,” said Laura Chick, Los Angeles City Councilwoman for the Woodland Hills district. “We’re in an era where, sadly, we’ve seen a lot of our corporate tenants leaving Los Angeles and here’s an example of a very important one saying, ‘I’m staying.'” Health Net, which has been housed in about 300,000 square feet of space at the Warner Center Plaza I high-rise for the past 15 years, had considered moving to Burbank or the Conejo Valley before selecting the Lennar site. The HMO had explored leaving Los Angeles in part because, like the rest of the health care industry based here, it pays millions more in annual business taxes than it would if located in cities like Burbank or Thousand Oaks. Once utility and business taxes are taken into account, HMOs in Los Angeles can pay up to $18 more per square foot for 250,000 square feet of offices than they would in those other cities, according to estimates by real estate consulting firm Kosmont & Associates. But the move from the Warner Center high-rise to Lennar’s 35-acre, low-rise office complex also allows Health Net to meet its needs with less square footage. Because of the large floor plates in campus-style buildings, “you can make much more efficient use of space,” said Lisa Kalustian, a spokeswoman for Health Net, who confirmed the company’s deal with Lennar. Health Net expects to move to its new offices in phases, beginning in the last quarter of 2001. Lennar earlier this year broke ground on the first of about 10 buildings it plans to erect on the site. The two buildings in phase one are each planned to contain about 178,000 square feet of space. The Health Net deal will lock up about 80 percent of that space, and it has encouraged Lennar to move up the timetable for the next phase of the development. “We’re getting going on the retail portion as soon as possible,” said Kevin Read, vice president of acquisitions for Lennar, of the 10,000-square-foot retail component including food services designed to serve the office tenants. In addition, Read said the company is now planning to demolish one of the existing buildings in preparation for the second phase of construction about 12 months sooner than was first anticipated. Chick believes the decision by Health Net to stay in Warner Center could pump up demand in the area, provided Warner Center can establish a competitive edge, particularly over neighboring communities to the west. Envisioned more than three decades ago as a business hub for the West Valley, Warner Center has also operated with restrictions such as so-called “trip fees” developers must pay on the additional traffic their projects generate. Those disincentives have served to curtail growth and make the area less attractive to developers, she said. “All of those things make it difficult for property owners to attract tenants or to get someone to come in to develop,” Chick said. “I’m hard at work to revisit the Warner Center specific plan and look at ways to further encourage commercial development to locate there. Some of the things we’re looking at is, how do we deal with mitigating traffic impacts without making parking restrictions or trip fees so onerous that developers or tenants choose to go elsewhere.” Others are not quite as certain that the Health Net decision will spearhead a renaissance of interest in the area. “It’s just less space on the market, but I don’t think it’s a huge stamp of approval,” said Tom Specker, a broker with Charles Dunn Co. Inc. who handles office space in the area. “Does it mean that more people will come here? Probably not.” At the very least, however, the Health Net decision vindicates what some thought was a risky gamble by Lennar when it acquired the office complex in 1998 and announced plans to build an additional 1.5 million square feet of office space on the site. Another developer, Katell Properties, pulled out of a plan to develop about 700,000 square feet of speculative office space in Woodland Hills after an unsuccessful attempt to attract tenants. Others wondered whether newly developed projects in West Hills, as well as in Calabasas and Westlake Village, would dampen the market for office space in the older Woodland Hills neighborhood. With office vacancy rates in the West Valley at slightly more than 10 percent, officials at Warner Center Properties, which manages the high-rise that Health Net is vacating, are not worried about filling that space either. With space in the area so tight, Warner Center Properties has had difficulty accommodating current tenants who want to expand. The Health Net decision effectively makes one entire building available to help retain tenants that previously may have had little choice but to relocate. “We made an attempt to keep (Health Net), and we’re sorry to see them go,” said Donald W. Hudson Jr., senior vice president and director of leasing. “But this market is so hot. We’re already working on (contracts to fill) about 200,000 square feet.”

To the casual observer, Los Angeles County may appear to be an extremely diverse place. But a new USC study paints a picture of a community sharply divided by race, with ethnic and class groups clustered within their own homogenous pockets throughout the region. Further, the increasing isolation of blue-collar minority workers in central L.A., with affluent whites living on the periphery, could have devastating consequences for the local business climate. L.A. has the largest Mexican, Salvadoran and Korean communities outside those countries. Yet according to the study, the likelihood of running into a white person in a Latino neighborhood has diminished rapidly over the years. In 1960, for example, Latinos living in Central L.A. would have had a 38 percent chance of living and interacting in the same neighborhood with whites, but by the 1990s that had fallen to an 8 percent chance. By the same token, a black person living in the San Fernando Valley now has a 13 percent probability of living and interacting in the same neighborhood with a white person, compared to a 65 percent chance in 1960. “What is troubling is that the divide is getting worse,” said Philip Ethington, the study’s author and an urban and political historian at USC. “This suggests that this is not a temporary stage where immigrant groups cluster in one community before moving upward on the social ladder.” The pattern that has emerged in L.A. County is one of a homogeneous, Latino core in the inner city, a transitional, mixed-race zone between the urban core and the periphery, and homogeneous white enclaves on the Westside, in the western San Fernando Valley, and in the beach cities in the South Bay. Moreover, the study shows that, with the exception of the San Gabriel Valley, there is a persistent correlation between high property values and white majorities in L.A. County, as a result of white blue-collar workers leaving the urban core, where home values are traditionally lowest. In the San Gabriel Valley, the study found no systematic correlation between white neighborhoods and property values, making it the most racially egalitarian region of the county. One highly troubling result of the segregation of L.A. into a wealthy white periphery and a poor minority core with neither side interacting much with one another is that it fuels secession movements, such as the one in the San Fernando Valley, in which wealthier whites seek to break free of the burdensome core to preserve their quality of life. “The secession movements could shrink the city of Los Angeles to a non-white core,” said Ethington. “That would be disastrous for the city because it would lead to a situation like that in Detroit, where a poor, non-white population is left to support the city.” Although the San Fernando Valley, if it were to secede and become an independent city, would contain large minority populations, its departure might trigger similar moves that would leave a city of L.A. where the vast majority of residents would be low-income minorities. These people would have to provide the money for the city services needed to keep a huge metropolis running, and failure to do so might have serious consequences for the local business climate. L.A.’s ability to attract and retain businesses depends on such amenities as a well-maintained infrastructure, a reliable police force, and an efficient bureaucracy, among others. All of these could be undermined if the city does not have adequate cash flow. But even if L.A. were to split into two or more municipalities, some local observers are reluctant to see a possible abandonment of the urban core by the wealthy periphery as an unmitigated disaster. “No doubt the devolution of the community through the secession movement has the potential to isolate poor people without sufficient funds to support themselves,” said Gregory Rodriguez, a Los Angeles-based fellow with the New America Foundation in Washington, D.C. “At the same time, we’re seeing minorities seeking greater local power, for example in the school district, and a new confidence they can run the system themselves without depending on others.” Rodriguez points to municipalities such as Inglewood and Huntington Park as examples of communities where non-white majorities have had success in creating a viable business climate and providing adequate city services.

You’ve heard it before: Corporations are no longer loyal to their employees or vice versa. Medical insurance is disappearing. Corporate pensions are dinosaurs. Future Social Security benefits will probably be lower, if they exist at all. Such statements may be hyperbole, but they correctly identify major trends. What they don’t do is tell us what we need to do to adapt and thrive. When the histories are written, we’ll look back and see that the golden age of benefits lasted about 40 years and ended sometime in the mid-80s. During that period, the workweek was shortened, vacations and holidays grew, corporate pension plans dominated our futures and health benefits expanded year after year. Even as corporate largesse expanded, government benefits ballooned. Social Security schedules were improved. Early retirement became possible. And lifetime government medical insurance was created and expanded. Nor did the cornucopia end there. Fueled by government-backed home mortgages, home ownership became possible for millions of American families. The expansion of home ownership began what may have been the largest redistribution of wealth in the history of the world. In the late 1970s and early 1980s, I regularly received letters from readers who were trying to plan their retirement. They had no 401(k) plans and their savings were limited. A few had profit-sharing plans. But many had some combination of the following: A company pension that rewarded 30 years of service with a lifetime income that replaced about 40 percent of their final salary. A profit-sharing plan that created, for some, a small fortune. Social Security benefits that replaced another 35 to 40 percent of their salary for themselves and additional benefits for their non-working spouse. The total came to more than 50 percent of their final salary. Combined with the corporate pension, the total replacement rate for their earned income was nearly 100 percent. There was also a home that was paid for and that had probably tripled in value since purchase. In some instances, the home value had multiplied 10 times. More important, the home could be sold as part of a move from the Northeast or Midwest to the Sunbelt states where housing, taxes, insurance, food and utility expenses were lower. The rules for doing well were simple: Stay as long as possible with one employer, buy as much house as possible and hang on. That world has all but disappeared. The number of corporate pension plans peaked in 1985 at 112,200 and hit 42,300 in 1998. At that rate of decline, they will be all but gone in a decade. Of those still in operation, many are being modified in ways that reduce future benefits. While scheduled Social Security benefits will replace the same portion of income as in the past, workers now have to pay more into the system. Worse, benefits were made taxable for some recipients in 1983, becoming de facto means-tested. Some analysts worry that benefits will have to be scaled down as much as 25 percent when the baby boomers retire. Finally, home ownership is no longer a lead pipe cinch. On the inflated East and West coasts, prices are beyond the reach of most workers. Throughout the country, shifts in regional fortune have created bonanzas for some, disasters for others. To create still more uncertainty, the cornucopia of government health care for the elderly now faces demands and pressures never imagined. Today, a woman approaching 60 who is healthy, has no history of heart disease or cancer in her family and has a healthy lifestyle, can expect to live to be nearly 100 years old, vastly increasing her need for income to pay both living expenses and health care bills. Only a century ago, we feared that our children would die in childhood, almost before memories. Today, we fear outliving our memory and even our identity. The rules for living have changed. Question: I am really puzzled by the confusing factors surrounding investing for income, particularly current interest rates, Treasury yields, bond fund performance, bank CD rates, inflation, etc. An inverted Treasury yield curve has historically come before a recession. Do you believe that is the situation at hand, or is this just another historical pattern being invalidated by the “new investment era”? R.M., Dallas Answer: The Treasury yield curve the curve made by connecting the yields on Treasury obligations from three months to 30 years isn’t the indicator that it used to be. One reason is that the Treasury has been buying back long-term issues. This has forced yields on long Treasuries lower. Another reason is the prospect of a long period of government surpluses that could result in enormous reductions in the amount of Treasury debt outstanding. Beyond the Treasury arena, yields are much higher. Recently, for instance, the yield to maturity on GNMA issues with an average life around 10 years was about 7.4 percent, a 160-basis-point premium over comparable maturity Treasury issues. Similarly, long-term tax-free municipal bonds have been providing yields that were 90 percent of comparable taxable Treasury yields. There is also a large premium to Treasury yields on guaranteed investment contracts (GICs) from insurance companies. Recently, the T. Rowe Price GIC Index showed yields of 6.6 percent for one-year contracts and 7.18 percent for five-year contracts. As a consequence, the Treasury yield curve probably isn’t a good tool for economic forecasting. What’s the alternative? That’s what everyone wants to know. Q: Although I was familiar with exchange traded funds (ETFs) previously, your recent description in a column caused me to think there are many similarities between ETFs and closed-end funds. If so, do you have any thoughts on why ETFs have been successful during their relatively short lives compared to closed-end funds? What is particularly interesting here is that most of the closed-end funds sell at a discount and still don’t seem too popular with investors. Or are the ETFs less popular than I think? K.W., Dallas A: If you check the most active issues on the Amex on any given day, most of them will be ETFs, usually led by the Nasdaq 100 unit. They are very popular because they can be traded through the day, margined, shorted and should operate with very low costs. I suspect that one of the reasons ETFs are so popular is that index funds have “opened the door” to the idea of unmanaged portfolios. In addition, the very mechanism of their creation means they should never sell at a premium or discount to the underlying asset value. Questions about personal finance and investments may be sent to Scott Burns, The Dallas Morning News, P.O. Box 655237, Dallas, TX 75265, or faxed to (214) 977-8776, or by e-mail to [email protected]. Check the Web site: www.scottburns.com. Questions of general interest will be answered in future columns.

Valley community leaders and secessionists have given an almost unanimous thumbs-down to a draft plan for a system of neighborhood councils, part of a charter reform effort aimed at offering more local control that some hoped would take the steam out of the Valley secession movement. The plan, released less than a month ago by the Los Angeles Department of Neighborhood Empowerment (DONE), offers few specifics on what councils will look like or how they will be organized. So far, it has only fueled mistrust and irritated secession leaders. “Neighborhood councils were supposed to be the way to head off secession,” said Richard Close, chair of Valley VOTE, the organization pushing for a secession study. “Just the opposite is happening by having such a loose framework. It’s going to make sure very few of these happen and, more likely, secession will be the only way for communities to have local control.” Rosalind Stewart, general manager of DONE, said the proposed neighborhood councils were never intended to address the concerns of secessionists. Instead, Stewart said, the citywide plan is meant to bring community groups together to discuss problems. But critics say the draft plan is so vague it could be difficult for neighborhood councils to have any meaningful influence. The vagueness also means the City Council will be hard-pressed to approve a neighborhood council plan by June 2001, critics say. The one specific listed in the draft plan a call for each council to represent about 25,000 residents has been rejected by neighborhood and secession activists as too small a number. They say 160-plus councils are too many for the city to handle and would render each group virtually powerless. The Studio City Residents Association, which had been optimistic about the draft plan before it was released, has begun lobbying City Council members because it opposes the proposed size of the neighborhood councils. “To start too big puts charter reform at risk,” said Tony Lucente, president of the Studio City Residents Association. Close and others said the groups should be developed around existing communities, regardless of size one council for Sherman Oaks, one for Studio City and so on. And he believes larger communities should be able to decide if they want more than one council. And that’s not the only problem. Chick said she is concerned about how DONE may use public feedback from the draft in adopting a final proposal. She also worries about how neighborhood councils will be certified and whether less organized neighborhoods will be given help in forming their councils. She also said DONE is considering setting the neighborhood councils up as nonprofit organizations, which would force groups to compete for limited resources. Stewart stressed that the released plan is only a draft and the size of the councils may change after public hearings. So far, she said, reviews have been mixed. “That’s the purpose of our hearings, to hear from the public,” Stewart said. She further said that DONE believes the small-size model would be workable. The draft plan’s vague wording and call for small councils has secessionists claiming City Council members are purposely setting the proposal up for failure to avoid diluting their own or the mayor’s power.

Hoping to piggyback on the success of its neighbor, Vestar Development Co. has begun a shopping center next to the Camarillo Premium Outlet. In recent weeks, Vestar opened escrow on a 45-acre parcel with plans to construct a 400,000-square-foot retail, entertainment and hotel complex on the property. “All these people drive up from Malibu and the Valley and turn around and go home because there’s nothing else to do (except shop),” said Jeff Axtell, director of development for Vestar. “So it’s a natural extension to do a lifestyle mall that creates a destination hub for the whole area. We can leverage on the success of what’s there.” Since it was built in the mid-1990s, Camarillo Premium Outlet has grown to a 120-store mall that attracts over 11 million visitors annually. So far this year, the mall has registered a 13-percent increase in traffic, said Michele Rothstein, a spokeswoman for the mall’s owner, Chelsea GCA Realty Inc. Unlike many other outlet malls, which typically feature outlet operations for mass market brands, Chelsea’s malls include a large representation of tony designer labels. The Camarillo outlet, for example, includes such stores as Donna Karan, Kenneth Cole, Bose and Laundry by Shelli Segal. The combination of designer labels and discounted prices has built Camarillo into a highly successful mall attracting shoppers from throughout Southern California and internationally. Chelsea reports only its portfolio-wide sales per square foot average, which is $370 per square foot, but Axtell said the Camarillo mall generates about $400 per square foot, at the high end of the industry average for shopping malls. What the mall lacks, however, are the dining and entertainment options available at many upscale shopping centers, and that’s where Vestar sees its opportunity. The company hopes to build about 50,000 square feet of sit-down restaurants and other outposts offering music and other forms of entertainment, along with an assortment of specialty and chain stores carrying apparel, home furnishings, books and sporting goods. “The whole point being that (customers have) driven two hours to get there, (we want to) give them additional reasons to stay longer,” Axtell said. In addition, Vestar is planning a hotel for business travelers, who have been coming to the city in greater numbers as the area’s high-tech (and other) business has increased. “The city is telling us that there’s a big demand for more (hotels),” Axtell said. The parcel, at Las Posas Avenue and Ventura Boulevard, was sold by Prime Retail Inc., which at one time entertained plans to develop the site into a second factory outlet center. The company decided to sell as part of an overall strategy to divest some of its properties. Vestar, a shopping center developer that recently completed the Glendale Fashion Center, declined to disclose the purchase price. Company officials said it is just beginning its work on the development. “We just started our due diligence, and it will probably take several months before we get the construction contracts,” Axtell said. The company expects the center to open in the spring of 2002.

In today’s tight job market, it’s hard to find good workers. That has forced many employers to use their imaginations to find people to hire. Ellen Dee and Gail Solomon, president and vice president of Woodland Hills-based On-Site Lasermedic Corp., have found their employees by doing everything from approaching workers at car washes to running newspaper ads targeting retirees. Dee spoke to reporter Jennifer Netherby recently about hunting for workers and the laser printer repair business. “We really believe in hiring senior citizens. We find they’re extremely loyal and valuable employees. They are here every day, and they are effective. That started with my dad, who is 87 and has been a salesperson all his life. He can’t go out on calls anymore. When we started the business, he would make calls and set appointments for me and I’d got out and sell. I said, ‘There’s got to be more people like him around.’ “So we ran ads in the paper and hired more seniors. “We’ve also gotten technicians from car washes. We ask if they can change the oil (in a car) and explain that fixing a laser printer is similar. “We treat our employees good. That’s what makes the difference. We flew one of them to New York for her mother’s funeral. “We started working together in 1981. We started On-Site Lasermedic in 1992. Gail and I had a company selling computer supplies on the Westside. In 1991, we noticed our clients were calling and looking for laser printer services. At the same time, Office Depot and Staples and other stores were making it difficult for us to compete. “Gail decided to check out the laser printer repair industry. We decided to sell our business, and we went to school to become Canon engineering technicians. We got certified and got out there and educated people in how they could avoid costly repairs. We learned in school that 90 percent of printer problems were from a buildup of dirt. Part of our strategy is to help people keep costs down. “On-Site Lasermedic started in November 1992. Today we have three offices: our Woodland Hills headquarters, an office in Orange County and an office in San Francisco. We have about 50 employees now, and we started with two. “Service for a printer ranges from $55 to $85. A lot of our customers know about us through word of mouth. Our customers can be someone with one printer to GTE, with 5,000. We have a lot of law firms, CPA firms and entertainment industry clients.”