As new president of cal state northridge, jolene koester must tackle a host of issues ranging from a north campus biotech center to the building of a football stadium The walls are bare and the shelves are empty in the president’s office at Cal State Northridge, a blank slate to be filled in by its new occupant, Jolene Koester. A nationally known expert in intercultural communications and a lifelong educator who has spent the last 17 years in the CSU system, Koester started at CSUN July 1 after being named to the post in November. She has spent the last six months brushing up on CSUN issues while finishing out the year at Cal State Sacramento, where she was provost. Koester takes the helm at CSUN at a pivotal time for the school. As president, she will have to make some tough decisions. Among them: should the university build a new football stadium on campus despite neighborhood objections? And how should the school’s 65-acre North Campus be developed? The university has been plagued with high turnover of its top staff and has also been criticized as being too insular. The campus itself is still in disrepair, thanks to massive damage from the 1994 Northridge earthquake. CSUN is still trying to shore up private funding to pay for equipment and technology in the new buildings, the last of which should be completed by mid-2001. Koester’s office is in a portable building, one of the many across campus intended to temporarily replace damaged structures. Despite it all, Koester is optimistic that CSUN has a strong enough foundation to overcome the problems. Question: What’s your first priority as president? Answer: I have for the first year identified three priorities I’m going to focus on internally. One of those is to build and establish a strong core leadership team. Fortunately, I have the beginnings of that in Louanne Kennedy, who’s done a tremendous job as interim president and who will stay with the institution working as provost. We have a new administrative vice president starting this month. He too has a lot of experience in CSU. And then we’re searching for a vice president of university relations and a vice president of student affairs. Those individuals are absolutely key to the establishment of a stable, collaborative administrative team. Another major priority is to build the contributed private funds for the institution. A third priority for next year is to work on continuing to develop the campus as a user-friendly environment so that students have easy access to what they need, so the public has easy access to the university and so that the people who work in the university find a service orientation from others who work in the university. It’s a very important part of what most universities need to do. Q: Your expertise is communications, and as I’m sure you know, one of CSUN’s past stumbling blocks has been the way it communicated or didn’t with the neighboring community. How do you plan to remedy that? A: I think this university serves multiple communities the San Fernando Valley, the Santa Clarita Valley, the Antelope Valley all of this larger region is served by California State University Northridge. Certainly, the neighbors are an important community and we want to be good neighbors. We have a mission and we will need to fulfill that mission. And as an educational institution, it means we’re going to bring large numbers of people to campus. Large numbers of people mean traffic and buses and a whole host of things that are difficult for those people who live contiguous to the campus. But we’re going to be as respectful as we can, recognizing that we still have to serve a mission and that mission includes serving other communities as well. Q: North Campus development has been an ongoing issue. While MiniMed has agreed to build a biotech complex there, finding other uses, like sound stages, has been a challenge. Have you made a decision on how the university should grow on North Campus? A: The North Campus development has been an issue for Northridge almost from its inception. My sense of that is, it’s going to take me a little bit of time to figure out what’s going on. I think we also have to have MiniMed get up and running and have them occupy the space and have them work with us in developing those important linkages and relationships back to the academic programs. Anything a university does has first and foremost got to be linked back to its instructional programs. Student learning is the reason that we’re here. So it’s a nice confluence of timing, for me to come on board the first of July, to have a little bit of time to understand some of the issues, some of the problems, some of the opportunities, but simultaneously let MiniMed finish their construction, move their staff over here and have the opportunity to work with our folks. We want to develop those internships, research partnerships, educational collaborations and see how that works before we make a decision with North Campus. Q: Another question is whether to build a bigger football stadium on campus, which neighbors have opposed. A: We’ve got a little bit of breathing room on the football stadium issue at this point. The move (by CSUN’s football team in May) from the Big Sky to the Big West (conference) changes the imperative in terms of the nature of this football stadium. Big Sky required a very large, much more elaborate stadium facility than the Big West does. For the 2000-2001 year, we’re going to play right where we’re playing right now (at North Campus stadium). After that, we’ve negotiated a temporary agreement for Pierce (College). We’re going to have to take this opportunity to look at our overall athletic program and decide what we need in a stadium, then we’ve got to worry about financing, which is no small issue and won’t happen unless we get a great deal of support from the community. Q: CSUN has begun a $10 million capital fund-raising campaign to pay for technology and equipment improvements. How successful has it been? A: The campaign is going very well. It is already halfway to its goal of $10 million. In addition to the very tangible results in dollars contributed, we had very positive reactions from corporations, alums and prominent members of the community. I’m going to focus a great deal of attention on that campaign and on solidifying the university’s ability to raise private money in the future. Q: How will you do that? A: Clearly, hiring a vice president of university relations is part of it. I’m going to be devoting a great deal of time in working with the other senior officers of the university and the deans. I personally am going to try to meet with CEOs of the major corporations in the Valley, to connect with the alums, working very closely with the CSUN Foundation, which is the major fund-raising arm of the university. Q: CSUN and other California State University campuses are expecting enrollment bulges in the coming decades. How do you plan to keep up with sudden expansion? A: This campus has a commitment to providing students with access to higher education. It historically has had that commitment, and I place a high value on assuring this university is open to those people who need and want higher education. Having said that, we are in a very good position to follow through on that commitment. First of all, California State University Channel Islands will gradually be up and running over the years, so it will be able to respond to some of that need. Second, this campus will use technology in ways that the faculty deem appropriate to try to increase access courses taught through technology, parts of courses taught through technology. That will allow us to be slightly more flexible in how we provide instruction. We will also as a campus depend on some alternative means of scheduling. We’re moving this summer in a limited way to year-round operation, which means that some students in some programs get to attend summer school paying state support fees rather than continuing education fees (which are higher). Q: Studies show that students who graduate now can expect to change careers five or six times in their lifetimes. As an educator, how do you think you can prepare students for that? A: Ironically, I think one of the strengths of an institution like CSUN is it allows us to handle these changes in the workforce and the evolving character of people’s careers, and it’s because an undergraduate education is grounded in the liberal arts. What that kind of education provides is two core things. One is solid education in basic skills writing, speaking, reading, problem-solving and critical thinking combined with what a liberal arts education does, which is teach you how to learn. What I always want to tell students when I meet with them during freshmen orientation or transfer orientation is that the most important thing a university can teach you is how to learn. That’s what you need to do your whole life. Q: What do you think about living in Los Angeles so far? A: So far it’s been fine. I’ve had a few experiences on the 405 where one small accident or car that’s in disrepair seems to block things for a lot of miles, but so far so good. It’s a very different environment, there’s a lot of things to add energy and excitement.

Schoolteachers cope with two major problems: low salaries that make it difficult to save in the first place, and cost-ridden savings plans that can make their work life look like Fat City compared to their retirement income. Now there are glimmers of hope for the savings plan part of the problem. If you’ve never heard of 403(b) plans, don’t worry. They are similar to 401(k) plans, but for nonprofit institutions. Unfortunately, the plans are rooted in insurance-based products that tend to be burdened with high commissions, high redemption penalties and high operating costs. While expenses for employer-sponsored 401(k) plans are relatively low and falling with many large plans well below 1 percent a year the typical variable annuity sold to people eligible for 403(b) plans has annual expenses of more than 2.0 percent. Worse, much of the investment money goes into fixed-income annuities that have significantly lower returns than equity funds have had over the last 15 years. So where are the glimmers of hope? In lawsuits and in the development of Web-based information on the products being sold to teachers. One example of legal action comes from Martin, Drought and Torres, a San Antonio law firm that started to take insurance companies to court in the early ’90s. According to attorney G. Wade Caldwell, the firm has filed and settled one suit, has five pending, and will soon be filing another two suits. All the suits are in Texas. In a recent telephone interview, Caldwell explained that the situation was particularly bad in Texas because the Legislature had passed a law prohibiting school districts from limiting 403(b) vendors. Aimed at protecting teachers from sweetheart deals that could enrich a school superintendent or board member, the law worked to allow a proliferation of vendors. “It prevented school districts from protecting employees,” he said. “So teachers are offered expensive and sometimes fraudulent products. We’ve seen cases of 23 percent commissions.” I asked what kinds of problems he has seen. “There are a lot of product and conduct issues. One (product issue) is called Tax Sheltered Life. It has a large premium with a small death benefit. Another is Equity-Indexed Annuities. In the ones we’ve seen, the salespeople don’t understand that the product isn’t invested in the stock market.” Another is Old Money/New Money contracts. The teacher gets credited 6.5 percent on new deposits, but money that has been invested 12 months or more only earns 4.5 percent. Still another is the two-tier annuity. These are sold as rollover products where the teacher is told that the seller will compensate the teacher for the withdrawal penalties on the annuity being redeemed. The teacher sees two account balances, the 100 percent balance plus interest, and the second-tier balance, which is the actual deposit less surrender charges. There is a gap between the two amounts that never disappears. The only way to get the upper-tier amount is to stay with the company and annuitize giving up the principal for a lifetime monthly income. When that was done, the company paid zero interest on the amount annuitized. Beyond that, there is the basic problem of the use of variable annuities inside 403(b) plans and the expense of the death benefit. Caldwell also said some insurance companies go to great lengths to look as if they are sponsored by teacher organizations or the school district. One company the firm is suing, he said, formed a cafeteria plan administration company and then offered to do benefit administration for the school district for free in exchange for being allowed to sell variable annuities during enrollment periods. While Texas may be one of the worst states for major abuses and deceptive marketing practices, it is not unique. So what can teachers do? Get educated about investments and the choices available for 403(b) plans. Where do you start? On the Web. Caldwell’s firm offers basic reading and helpful links on its Web site (www.mdandt.com). For a more ambitious effort, visit www.403bwise.com, a site operated by two former California teachers. Like fundalarm.com, this site carries no advertising and is supported only when visitors buy books and other products on linked sites. If you are a teacher, think of these sites as your summer reading assignment. Question: I am 59 and my wife is 55. We are planning on retiring sometime within the next three to five years. I am presently employed (annual salary $124,500), and I have a retirement of around $30,000. She is also employed (annual salary $110,000), and she will have a retirement of around $32,000. Add in Social Security, and it is quite a tidy sum, around $90,000 a year. Also, we probably have $800,000 in 401(k) plans. The equity in our current home is around $125,000. We are planning on selling it and building one on the coast for around $275,000. Should we pay off the new home with the equity from our current home, plus draw down on my 401(k), or should we do the 20 percent down with the monthly payments, which will be around $2,400 per month, or something in between? B.M., by e-mail Answer: Something in between. As a practical matter, I prefer looking for ways to avoid mortgage payments after retirement. Much of the interest paid will not be tax-deductible because of the standard deduction, and it can commit you to a relatively high rate of withdrawal from your IRA or other tax-deferred plan, something that can endanger a nest egg. In your case, there is another way to look at things. With Social Security and pension income of $90,000 a year, you can easily support $150,000 of mortgage debt in retirement without considering your nest egg. At 8.5 percent interest, the monthly payment on a 30-year loan would be $1,153, or about 15 percent of your Social Security and pension income. That’s not a big burden. Basically, your home mortgage will serve to add some leverage to your overall portfolio. Your actual investment fund can be set for a low withdrawal rate of, say, 3 percent, and it will still provide an additional $24,000 a year of income. Questions about personal finance and investments may be sent to Scott Burns, The Dallas Morning News, P.O. Box 655237, Dallas, TX 75265; or by fax: (214) 977-8776; or by e-mail: [email protected]. Check the Web site: www.scottburns.com. Questions of general interest will be answered in future columns.

The Economic Gods must be looking down on Alan Greenspan and smiling. Or is it the other way around? For the second consecutive month, the tone-setting employment report reinforced the idea that Federal Reserve pilot Greenspan was well on his way to achieving the elusive soft landing for the U.S. economy. A proxy for output, aggregate hours worked, rose 1.3 percent in the second quarter. Allowing for a modest increase in productivity, real gross domestic product is on track for 3 percent growth in the April-June quarter, according to economists at Bear, Stearns & Co. Some Fed officials, notably Gov. Larry Meyer, believe economic growth must slow to below its non-inflationary potential after many years of exceeding the speed limit in order to prevent inflation from accelerating. Undoubtedly there is neither the political will nor popular support to hoist the unemployment rate, which slipped 0.1 percentage point to 4 percent in June, to Meyer’s prescribed 5 percent to 5.25 percent. The headlines from the June employment report were a touch softer than traders’ expectations, sending Treasury note yields plummeting as another potential obstacle to an August “pass” from the Fed was removed. A mere 11,000 persons were added to the job roster last month; without the decline in census workers, private payrolls rose a respectable 206,000. May’s revised decline of 165,000 non-farm jobs still seems fluky in a labor market where the chronic complaint is the lack of skilled workers. In retrospect, the May dive looks like a payback from the inflated job creation 374,000 and 290,000 for private payrolls in March and April, respectively which may have been the result of unseasonably warm weather. In the first half of this year, the monthly increase in private payrolls averaged 177,000, down from 202,000 for all of 1999, according to the Bureau of Labor Statistics. In other words, the trend is approaching the 125,000 to 150,000 that would stabilize the unemployment rate at the current 4 percent, given labor force growth of 1 percent. Within the statistics were some interesting trends. Employment in finance, insurance and real estate fell for the fourth consecutive month in June. The cumulative year-to-date decline of 20,000 jobs comes on the heels of four and a half years of steady growth, according to the BLS. Declines in banking, mortgage banking and insurance more than offset the growth at securities firms. On July 7 it was reported that Merrill Lynch & Co., the nation’s largest brokerage, plans to eliminate 2,000 jobs, or 5.4 percent of its workforce. Is it an isolated example or the start of a trend at a time when a stock purchase no longer yields instant profits? Average hourly earnings rose 0.4 percent in June, which won’t sit well with the wage-inflation crowd. What is remarkable is that the year-over-year gain has been rock steady in a 3.5 percent to 3.8 percent range for the last year and a half. Even with slower productivity growth and a big increase in unit labor costs in the second quarter, “the year-over-year trend will still improve because we had such horrible numbers in the second quarter of last year,” says Bear, Stearns economist Melanie Hardy. Non-farm business productivity rose a scant 0.5 percent in the second quarter of 1999, while unit labor costs soared 4.5 percent. With the National Association of Purchasing Management’s weak June survey and last week’s employment report establishing a soft tone for the second consecutive month, the Fed can afford to stand pat at its next meeting on Aug. 22. Alan Greenspan has been around too long and is too familiar with the vagaries of data to take a snooze in that bathtub of his just yet. Like other economists, he is probably stunned by the degree to which all of the economic indicators have lost altitude simultaneously. There is generally an order to things, which has as much to do with psychology as economics. In general, it starts with the consumer, who gets a signal from higher interest rates that it’s becoming more lucrative to save than spend. Contrary to conventional wisdom, spending leads income, not the other way around. If income determined spending instead of merely furnishing the wherewithal to spend, how would GDP (a.k.a. income) ever turn around? Producers generally need to see a trend develop before adjusting output. One month of sluggish sales has to become a pattern before they are willing to risk cutting production. Lower output means less labor. Layoffs lead to a loss of confidence, a further curtailment in discretionary spending, and the circle repeats itself. Having said all that, it would be remarkable after years of begging for workers to see employers pare payrolls so quickly, especially since many of them had to provide incentives, including benefits and bonuses, to attract unskilled labor. Some economists aren’t convinced that the labor market has been quenched or the Fed demoted to inactive service. “There are two paths to more Fed tightening,” says Bill Dudley, chief economist at Goldman, Sachs & Co. “One is a rebound in demand. The other is proof that Meyer is more right than wrong.” By that, Dudley means that it will become apparent that the unemployment rate really is a full percentage point or so below the inflationary threshold. “We know that Greenspan is not an advocate of the NAIRU concept,” the idea of a non-accelerating inflation rate of unemployment, Dudley adds. So it’s one man’s intuition vs. another man’s religion. Don’t expect a final answer anytime soon. Caroline Baum is a columnist with Bloomberg News.

Even as the L.A. City Council temporarily pulled the plug on a huge San Fernando Valley redevelopment project area last week after questioning the ability of the Community Redevelopment Agency to pull it off, the CRA is quietly moving to expand its scope of influence and power. Specifically, the CRA is seeking to create two other new redevelopment areas (in downtown and San Pedro) and to expand or revive several others. It wants to expand the existing Little Tokyo area, to regain its power to evict tenants and property owners in an existing project area in North Hollywood, and to revive that same authority in five other areas around L.A., including Chinatown and Hollywood. “This represents a substantial drive to start new areas or to complete work in areas that we are already involved with,” said CRA Administrator Jerry Scharlin. But Councilman Alex Padilla doesn’t think the CRA is in any position to expand. And he made that clear last week when the council’s Housing and Community Redevelopment Committee decided to put the 6,835-acre Northeast Valley project on indefinite hold. “The (project) is simply too large for the staff and other resources the CRA currently has,” Padilla said. “If the CRA can’t tackle a project of this magnitude in my district with the resources they have, then we must look very hard on a case-by-case basis at whether other new project areas should be created.” Others outside City Hall agreed. “I am very concerned about the budgetary implications of trying to do more than the agency is already doing,” said J. Eugene Grigsby, director of the Advanced Policy Institute at UCLA, who did a study two years ago evaluating the CRA. “There is no question that many areas in this city still need redevelopment, but the big question is, how you pay for it? You typically don’t see any positive revenue streams from a redevelopment project until five or 10 years out. So where is the money going to come from to start these projects?” The expansion proposals are contained in the CRA’s 2000-01 budget plan, which will be considered by the L.A. City Council later this month. The $389 million, balanced spending plan essentially paints an improved picture of the agency as revenue from existing projects has picked up in recent years and debt service has fallen. The budget even includes a request by Scharlin to add 20 people to the CRA staff, which now stands at about 180 people. If approved, the new hires would begin to reverse staff cuts that have seen the agency shrink by nearly 50 percent over the last 10 years. It also calls for $8 million for studies and other work needed to move ahead on the proposed new project areas and additions, which are likely to take at least a year to establish. How would the financially strapped agency pay for that expansion if it eventually goes ahead? In his June 1 memo to L.A. Mayor Richard Riordan and the City Council, Scharlin acknowledged the possibility that more funds might be needed to start up new projects or expand existing ones. And that money may have to come from city coffers. But, he said, “In our view, the financial status of the agency should not exclude the possibility of approving new redevelopment areas. It is our belief that every community that is blighted, as defined by redevelopment law, should have available to it the tools of redevelopment.” Padilla said he would have a problem with allocating more city money. “I couldn’t contemplate making the commitment for funds until I have a high comfort level with the people administering those funds,” he said. “And I definitely do not want to see funds approved for one project being transferred to another project down the road. I would urge that any monies approved for one project stay within that project.” Eyeing new projects It was just a year ago that the CRA was mired in a financial crisis, facing an operating deficit of up to $8 million a year because tax revenues from redevelopment projects weren’t coming in fast enough to cover staff and resource costs. Then-Administrator John Molloy resigned after tangling with the City Council over the need for more staff. Mayor Richard Riordan quickly named Scharlin to take his place. Scharlin warned last week that there is only a narrow window of opportunity to create a new redevelopment project in the downtown area. In the last year or two, developers have shown renewed interest in the region. But later this year, the Central Business District redevelopment area is due to hit a court-imposed $750 million cap that would force the CRA to turn over any additional revenues from the project area to other government agencies. That could prevent the CRA from using those funds to start new projects in the area. So the CRA wants to close out the existing project area and create a new one so it can continue to revitalize areas in the historic core; the exact boundaries would be defined after studies are done determining the extent of blight downtown. The CRA faces no such legal difficulties in the harbor district, the location of the other proposed new project area. Rather, CRA Deputy Administrator Don Spivack said the district just west of the existing Beacon Street redevelopment project area contains many older housing units and “obsolete” commercial buildings. The agency has also proposed adding 40 acres to the existing 67-acre Little Tokyo redevelopment zone, to include the area to the east that now contains artists’ lofts. “While there are lofts there, the retail and other commercial buildings in that area are rundown,” Spivack said. In the Laurel Canyon project area in North Hollywood, the CRA wants the City Council to grant it the power of eminent domain. Spivack said that when the redevelopment area was initially approved after the 1994 Northridge earthquake, it only allowed for the rehabilitation of existing structures. The CRA did not then have the authority to come in and use the power of eminent domain to buy out property owners and assemble large tracts of land for redevelopment. But the City Council waived that eminent domain ban when it authorized the CRA to find a developer to redo the Valley Plaza retail center. The CRA is now in exclusive negotiations with J.H Snyder Co., which has proposed a combination of retail and entertainment development for the aging plaza. Snyder is now in the process of acquiring the land, and any holdouts could be subject to the CRA’s use of eminent domain power. The CRA is now seeking to obtain that same eminent domain power for the entire Laurel Canyon project area. More projects expected In addition, the agency wants to revive its eminent domain authority in five other areas: Hollywood, the south end of the Alameda Corridor near L.A. Harbor, Chinatown, Pico Union East and the existing Little Tokyo project. Back in 1986, Spivack said, a change in state law forced the CRA to seek 12-year eminent domain authority for those and other project areas. That power expired in 1998. “In all of these areas, we believe there is still blight and we will have to prove so before we seek extension of eminent domain authority,” Spivack said. “But with the economy the way it is, we are expecting more projects to come down the pike in the areas where eminent domain authority has lapsed. Without that authority, it is doubtful the developers could ever assemble the land they need to make the projects work.” UCLA’s Grigsby said the CRA doesn’t actually use its power of eminent domain all that often. Rather, the mere threat of it prompts many landowners to sell their properties voluntarily. Grigsby said these areas already have CRA staff overseeing them, so simply reviving eminent domain won’t overly strain the CRA’s resources unless several major projects are proposed simultaneously. “It’s the new project areas that would require additional staff, and this in an agency that is already short-handed,” he said.

COMPETITION GETTING INTENSE AMONG VALLEY YOGA, MASSAGE PARLORS Nancy Corcoran remembers when the only people who practiced yoga were, in her words, “weirdos.” Stanley Grod recalls a time when most of his massage therapy clients were the idle rich. The good news for Corcoran, who owns Yoga for Every Body in Sherman Oaks, and Grod, the proprietor of Massage Masters Day Spa also in Sherman Oaks, is that their businesses are no longer the exclusive domain of a select clientele. Practices like yoga and massage have gone mainstream. The bad news for them is, now that they have, competition is proliferating. “There has been a lot more competition out there,” said Grod, who has been in the business for nearly 30 years. “We’ve got people up and down the boulevard charging $39 for a one-hour treatment.” A short ride down any stretch of Ventura Boulevard in the San Fernando Valley will reveal dozens of salons and day spas offering everything from shiatsu massage to reflexology, and nearly as many yoga studios. On the surface, the two businesses may appear entirely different, but they share one key element: Both promise relief from the stress and strain of modern-day life. And, along with herbal remedies and nutritional supplements, aromatherapy, acupuncture and Tai Chi, they have emerged from behind the fringes of the ’60s hippie culture and onto the front porch of Middle America. “We are now quite willing, as our society internationalizes, to view remedies other than the standard Western ways of doing things as OK,” said Alfred Osborne, director of the Price Center for Entrepreneurial Studies at the Anderson School at UCLA. “Look at what’s happening with alternative medicine. Other societies have found ways to deal with these things that have been adopted in America.” In the 1950s, hard work was seen as its own reward. By the 1980s, living well was the best revenge. But in the new millennium, the preferred tender for payback on our efforts seems to be relaxation. “There is a theme that has tended to get picked up by a variety of industries that basically says, ‘You work hard, you deserve a reward,'” said David Stewart, professor of marketing at USC’s Marshall School of Business. “There have always been companies that have reinforced these ideas, but I think it’s become more prevalent. The reason is, we have a much larger number of professionals who have a need for relaxation and relief of stress.” And the trend is not limited to doctors, lawyers and investment bankers, either. John Tayloe, for example, got so stressed out from running his animal training and exercise service that he went to see a doctor for his achy shoulders. Upon being told by the doctor that his soreness was stress-related, Tayloe turned to yoga. Once he started attending classes at Lifestyle Renaissance Yoga Studio in Studio City about a year ago, the sixty-something Tayloe said, he began to relax. “For years I had not really been breathing.” Now, Tayloe says, he uses the breathing techniques when he is sitting in traffic, before he goes to bed and at other times when he wants to relax. He has even quit smoking cold turkey. “It’s a very positive type of influence, and I feel like I’ll live longer,” Tayloe said. Cross-generational trend The exploding popularity of yoga, massage and other such practices cuts across virtually all demographic groups. Baby boomers, who have grown more introspective as they have aged, are driving some of the increased interest, but even younger people are embracing the trend. “This is a case where Generation X and the baby boomers may have some common values, but they grow out of different life experiences,” said Stewart. “Generation X grew up with (notions like) ‘red meat is bad for you,’ ‘you shouldn’t smoke,’ and other health messages that have been enforced in a variety of ways.” Consider a recent new enrollee at Lifestyle Renaissance Yoga Studio, a twentysomething show-business executive who came seeking a solution to a wicked case of road rage. “We’ve doubled our students in a year,” said owner Scott Alsop. “The two notable differences are very young people in their 20s, and men who wouldn’t touch yoga when we started two years ago. They (used to) think it was for women, and it’s not much of a workout, or they thought we all have dots on our foreheads and white flowing gowns.” The popularity of yoga has also been fueled by a growing number of celebrities who have embraced the discipline. “It’s a huge boost,” said Corcoran, who opened her studio about one-and-a-half years ago. “If a celebrity does it, everyone thinks its a good thing, even if it’s heroin.” Statistics are hard to come by, but most yoga studios in the Valley report seeing their student numbers increase by 15 percent or more a year. Many studios have doubled the number of classes as well as the class sizes over the past five years. Annie’s Yoga Studio in Sherman Oaks has been growing at an average rate of 30 percent to 40 percent a year for the past five years, said Dario Velasquez, the studio’s manager. It offers classes specifically geared to people with injuries, as well as more standard fare. “It became a fad, but also there are people looking for ways to relieve stress and this is the best thing,” Velasquez said. At Angel City Yoga in Studio City, one of the oldest studios in the Valley, the number of classes has doubled over the past five years to about 60 a week, according to Vice President Shosha Bottoms. “I’ve had a Hatha Yoga class on the schedule since 1989. Fifteen (students) used to be a big group. Now there are 40 students.” From luxury to necessity The American Massage Therapy Association reports 27 percent of American adults have visited a massage therapist in the past five years, up from 22 percent in 1998 and 17 percent in 1997. Though the rates for a massage can average from $50 to $60 an hour, therapists say many of their clients no longer view the service as a luxury. “We’re seeing an increase in business from people of all types,” said Grod. “They’re not waiting until they have more money. It’s more of a necessity.” Grod said the increased competition for massage therapy services was “very scary at first.” But as his business continues to grow by 15 percent to 20 percent a year, he has learned to live with the rival salons and spas. He regularly visits other massage salons as a client to make sure his facilities, services and prices are competitive. “You might call it spa spying,” Grod jokes. And last month he began offering prizes to clients who send the greatest number of referrals to the spa. Like many of his counterparts, Grod said he has come to conclude that the “bargain” spas offering massages at $39 are no match for the service and expertise provided at higher-end salons. Besides, as Suzanne Cohen, owner of Massage Therapy Center at the Sun Lounge in Encino put it, “There’s enough business to go around.”

As Mexico revels in its biggest political overhaul in more than 70 years, it’s looking like the Los Angeles economy could also become a big winner as a result of the landmark election. If Mexican president-elect Vicente Fox follows through on his campaign promises to strengthen his nation’s support of the North American Free Trade Agreement and reduce corruption, it could go a long way toward accelerating economic activity between L.A. and Mexico, according to local business leaders and academics. In essence, they said, the reforms promoted by Fox amount to a brand new rulebook that could ease the concerns of wary investors and businesses north of the border when doing deals in Mexico. “(Fox) is clearly a supporter of NAFTA,” said Fernando Guerra, director of the Center for the Study for Los Angeles at Loyola Marymount University. “He’s made no bones about wanting to further integrate the Mexican economy into the U.S. and Canadian economies.” That could translate into a number of benefits for L.A., including: >More daily commutes across the border. >More investment on both sides of the border. >Increased activity at the ports of Los Angeles and Long Beach. >More public-private partnerships to facilitate contact between Los Angeles and Mexican firms. Fox’s pro-business National Action Party, or PAN, won the Mexican presidency and control of that country’s legislature last week, becoming the first opposition party in nearly three generations to unseat the Institutional Revolutionary Party, or PRI. Fox has laid out primary goals of reducing corruption, reforming the judiciary, reducing the influence of the executive branch, and increasing financial accountability in the government all of which could serve to increase the stability of the Mexican economy. “These things speak to a much more open system, where investments can be pursued in a less-risky fashion,” Guerra said. “I think Fox, PAN, and Mexicans are going to look to the U.S. for support and investment, specifically to California and Texas.” But the resistance to such change is likely to be substantial. “All of the individuals who because of their political power, economic position and social relationships benefit from the existing system are going to be resistant to many of the changes Fox is going to attempt to implement,” Guerra said. “He can get everybody in (Mexico’s) congress to agree, but if nothing happens, corruption will continue.” In some ways, Fox will try to continue the already improving economic relations between Mexico and this country. For example, cross-border commerce, from daily commutes to capital investment, has been steadily increasing in recent years. “With the new president, it could expedite how quickly these things occur,” said Ross DeVol, director of Regional and Demographic Studies at the Milken Institute in Santa Monica. As an example of what could happen, DeVol pointed to Texas, where the governor’s office has a strong track record concerning open commerce with Mexico and where businesses view Mexican firms less as competition and more as part of their supply chain. That trend is especially strong among technology firms and border manufacturing operations, DeVol said. The strong relationship between Texas and Mexico is reflected in the volume of trade. In 1998, the latest year for which data are available, Texas exported $36.3 billion worth of goods to Mexico, compared to $13.3 billion exported to that nation by California. L.A. County’s portion of that 1998 export trade with Mexico totaled $2.8 billion, up dramatically from $1.2 billion in 1993, according to the Los Angeles Economic Development Corp. Local exports to Mexico are primarily manufactured goods, many of them components and textiles heading to Mexico for further assembly, and industrial machinery. So businesses in those sectors are clearly poised to benefit from improved trade under the Fox administration. Not everyone in L.A., however, is ecstatic about the future of Mexico under Fox. A possible increase in the number of U.S. manufacturing jobs lost to lower-paid workers in Mexico has local AFL-CIO officials withholding judgment until Fox’s intentions are more clearly spelled out. “Right now, we’re going to withhold comment on the election until we see concrete policies coming out of the new administration,” said Neal Sacharow, communications director for the Los Angeles County Federation of Labor. Owners of small firms in Los Angeles, however, are excited about the opportunities, said Ruth Lopez Williams, chairwoman of the Latino Business Association. “The opportunities are endless,” she said. Williams points out that 440,000 Latino-owned businesses in L.A. already share a language, culture and close family ties with Mexico. “There is one thing that is very powerful about our community, and that is we have larger families, and our families are on both sides of the border,” Williams said. “The doors will go back and forth probably a lot more.” Williams believes pro-business PAN policies will create a political climate that supports private-public partnerships that are likely to increase commerce. To that end, the LBA sponsored a local business-to-business event in March attended by Gov. Alberto Cardenas Jimenez of the Mexican state of Jalisco. The conference helped match up a total of 20 firms in Jalisco and California that could be interested in doing business with each other. Still, it’s unclear just how decisions made at the federal level in Mexico will affect the way local Mexican officials do business. “You would hope with the PRI losing the presidency and the legislature as well, there’s going to be a high turnover at the local level, and less state and government officials whose offices are almost institutionalized,” DeVol said. “They’ve been part of the crony system.” Williams agreed. “There’s a vast potential for Los Angeles, if Fox can follow through,” she said. “The jury is still out on that. But it creates a fabulous hope for some people that there is a possibility for change.”

Local startups are finding that overseas investors can be a much more agreeable source of funding than U.S.-based venture capital firms or angel investors. With most other countries still trailing the U.S. in terms of economic growth and technological development, foreign venture funds are eager to diversify their portfolios by investing in U.S. high-tech startups. Asian-American-owned companies in Los Angeles are particularly well positioned to benefit from these offshore capital sources because their founders often have strong ties with their countries of origin. “It is quite common for Asian-American companies to have better synergies with Asian investors than with mainstream U.S. investors,” said Pierre Wuu, chief operating officer with Click2Asia Inc., an L.A.-based Internet company. “Obviously, we speak the same language, and many Asians in America have lots of ties with Asia, which makes it easier for them to access capital there than in the U.S.” Click2Asia received funding from AsiaTech Ventures, a venture capital firm with a $120 million portfolio and offices in Hong Kong, Taiwan, Singapore and the Silicon Valley. Big jump in foreign capital There are no statistics on the number or value of L.A. County investments made by overseas entities. However, the U.S. Department of Commerce announced last month that foreign investors poured $283 billion into the U.S. last year, a 31 percent increase from the year before. This number includes large acquisitions, which have been on the rise in recent years, but anecdotal evidence suggests that the number of smaller foreign venture investments in L.A. is also increasing at a rapid pace. “In the past we would see these investments from time to time, but now we’re seeing them much more frequently,” said Tim Bruinsma, a partner at the law firm of Fulbright & Jaworski LLP, who has seen a number of his local clients secure funding from overseas sources. “There’s a lot of money around, for instance in Asian and Arab countries, that is looking for investment opportunities in high-tech startups in the U.S., because the rest of the world is still half a step behind us. Add to that the huge scale of the L.A. market, and you’ll see that a lot of that money finds its way here. After all, there are only so many companies in Silicon Valley.” According to Bruinsma, foreign investments in local companies are typically in the $1 million-to-$5 million range, and often the overseas investor will look for ownership of a piece of proprietary technology as part of the deal. The investor can use this technology for other, foreign-based companies in his portfolio. That was the structure of a recent deal struck by B2B Highway Inc., a logistics management Internet company based in Venice, with Final Line Inc. of England. In exchange for a $250,000 equity investment, B2B Highway will license its proprietary technology to Final Line. “They are setting up their own Web site in the U.K.,” said Michael Shirdel, B2B Highway’s president and chief executive. “They are not a logistics company, though, but an insurance company, and they will use our backbone technology for their site. If the occasion should arise, we could license this technology to other Web companies around the world as well.” The quest for technology, together with a desire to get a toehold in the strong U.S. market, are the driving forces behind many of the funding deals by foreign investors. “There are over 100 venture funds in Korea that want to invest here,” said Chung Youk, president of Hanmi Bank, an L.A.-based Korean-American bank. “But it’s not just the venture funds. There are also many large business groups that are attracted to high-tech companies in the U.S., because they want to get technological information in exchange for investments. There’s, for example, a lot of investment by Korean companies in biotech and telecommunications startups in California.” The Asian connection Korean-American companies are at a clear advantage when it comes to securing these investments, said Youk, because it is easier for Korean investors to understand and relate to their Korean-American counterparts than it is to people of other nationalities. An additional advantage for Korean and other Asian-American entrepreneurs who secure venture or other funding overseas is that the investors will more often than not be silent partners, rather than taking a more active role in running the company as an American venture capital firm would. “It is going to be much more difficult to exercise control over a company if you’re overseas,” said Bruinsma. “To that extent, foreign investors take more of a risk. But there are also advantages for them in terms of tax loopholes, and they can get a lot of leverage out of borrowing in one currency and lending in another, which justifies the bigger risks.” In addition to investing directly in L.A.-based startups, foreign investors have been actively investing in local venture capital funds. For example, DynaFund Ventures of Torrance is predominantly funded by Taiwanese capital, said Li-Pei Wu, chairman and chief executive of General Bancorp, the parent company of General Bank. (DynaFund officials were unavailable for comment last week.) “Taiwanese investors have been stepping up their interest in the U.S. over the last year,” Wu said. However, Wu believes that U.S.-based funds, even if they get most of their capital from Asia, are not as likely to prefer Asian-American startups. Indeed, DynaFund’s portfolio includes such familiar names as eToys Inc. and Cooking.com, which are not Asian-American-owned businesses.

Valencia-based 3D Systems Corp. is proof that it’s possible to turn a company around in a remarkably short period of time: All you have to do is fire your entire management team, radically cut expenses and pray the market for your product makes a giant comeback. At least that’s the model that worked for 3D Systems, whose stock was trading for $4 a share last September and hit a 52-week high of $20.13 on July 6. 3D Systems makes solid-imaging machines and thermal jet printers that convert computer images into solid objects, by instructing a laser to build a prototype out of liquid epoxy plastic. Up to this point, the technology has been used to make prototypes and molds. The company’s clients include auto manufacturers such as Ford Motor Co. and General Motors Corp., toy makers such as Mattel Inc. and medical supply makers. The stock price climb caps off a tumultuous year for 3D Systems, which was bleeding money a year ago. In June 1999, facing increasing losses, the board of directors voted to replace the existing management team. They hired consultancy Regent Pacific Management Corp. as an interim team to cut expenses and retool the company’s mission. “The company was in pretty dire straits nine months ago,” said Brian Service, the new president and chief executive. “Turnarounds don’t happen overnight. We’re still structurally improving the company, as well as refocusing.” They have made surprising progress. After three straight quarters of losses, 3D Systems was back in the black by the fourth quarter of 1999. For the first quarter ended March 31, it reported net income of $1.1 million (9 cents a share), compared with a net loss of $2.3 million (20 cents) for the like period a year earlier. Revenues were $23 million vs. $22.7 million. CEO Service credits the board of directors’ quick move in removing the prior management team and bringing in Regent Pacific as an interim manager for the turnaround. The new management cut operating expenses by 27 percent in the first quarter, consolidated the company’s European operations, laid off nearly 10 percent of the workforce and worked to increase the company’s recurring revenues for servicing and selling materials for its machines. “We took fairly difficult steps,” Service said. “But we didn’t do anything that would impede the company’s continuing growth.” At the same time that 3D’s management was working to cut costs, the market for solid-imaging systems began to make a comeback. In 1998 and 1999, the entire industry saw a slowdown as demand declined, said Terry Wohlers, of Wohlers Associates, a Colorado-based consulting firm to the solid-imaging industry. “The industry is only 13 years old,” Wohler said. “We’ve seen some leveling off in the past couple years in the level of growth.” That decline forced companies like 3D Systems to cut expenses. When the market began to recover last year, they got a double boost from lower expenses and more business, said L. Michael Braig, an analyst with A.G. Edwards. Braig said the current stock upswing has to do with 3D Systems’ push to extend the market for its technology. “The change in focus came because we saw a need for the company to get more benefit from the money it spent in development,” Service said. “And we saw that it was more what the customers and market were asking for.” Many companies like 3D Systems are changing from making models to pumping out actual products, at substantially lower costs than those experienced by manufacturers. 3D Systems is also developing new materials for use in building prototypes and products. Up to now, the material has been expensive to make, and thick and brittle, making it OK for a model but not much good for actual products. “Their belief is that using different materials will expand their market,” said Jeff Bansinderen, an analyst with B. Riley and Co. “I don’t know that that’s been proven yet.” Though analysts like Wohler are optimistic about 3D Systems’ future, Bansinderen is skeptical. He says some analysts have been overconfident of the company’s turnaround, with consensus estimates predicting annual earnings per share to reach 80 cents this year, compared with a loss of 47 cents a share in 1999. “The estimates may be a little aggressive,” he said. Though B. Riley doesn’t officially cover the company, he estimates earnings per share will hit 70 cents this year. Service said if the company is able to broaden its market, he believes its current stock price reflects its true value. Ever since the new management team was brought in last September, “the company has moved into profitability and essentially met analysts’ objectives,” he said.

Business Improvement Districts

Entertainment Kim Ashton has been named project manager at Burbank-based Dick Clark Communications Inc. She will be responsible for various functions, including supervising communications between clients and the company team, and serving as the primary contact for clients. Prior to joining, Ashton was in advertising. Also, Chris Ryall comes aboard as project director. He will be responsible for designing creative concepts for clients along with creating client proposals and implementing the company’s marketing efforts. Previously, Ryall was executive speechwriter and marketing specialist at American Honda Motor Corp. In addition, Maria Higgins has been named controller at Dick Clark Productions. She will oversee all financial reporting functions for company activities, including television production, business communications and company administration. Most recently, Higgins served as chief financial officer at S.L. Fusco Inc. David Demont has been named vice president of human resources for Camarillo-based Technicolor. He will be responsible for all aspects of functional direction and key initiative implementation for the human resources group, in addition to serving as a key advisor to the senior management team. Prior to joining, Demont was vice president of corporate human resources for Unocal. Food Processing Larry Kern has been promoted to president of worldwide fresh vegetables, packaged salads and non-tropical fresh fruit at Westlake Village-based Dole Food Co. Inc. He will be responsible for all vegetable operations and markets throughout Dole. Kern joined the company in 1993. Health Care Leanne Spaide was appointed executive director for strategic planning and business development at Adventist Health in Glendale. She will oversee strategic planning and business development for the medical center, as well as oversee marketing, sales and communications. Previously, Spaide was a senior manager with KPMG LLP. New Media Suzanne Brown has been appointed vice president of finance for Burbank-based B3 Corp. She will be responsible for all financial functions within the firm, including accounting, cash management, budgeting and planning. Prior to joining, Brown was vice president of strategic planning for Warner/Elektra/Atlantic Inc. Also, David Melnick has been promoted to vice president and chief technologist. He will be involved in all development of new e-commerce technology and oversee the corporation’s network operations and application development departments. Prior to joining, Melnick helped build an e-commerce practice at Deloitte & Touche LLP. Al Eisaian has joined North Hollywood-based LowerMyBills.com as senior vice president of operations and strategy. He will be responsible for leading the integration of all departments with Web operations and technology functions and identifying strategic business opportunities. Also, Mazda Marvasti joins the company as vice president of technology. He will be responsible for leading all facets of technology development. In addition, Oliver Chaine has joined as vice president of Web operations. He will be responsible for leading the deployment and ongoing Web operations management and contributing to strategic development in existing and future e-commerce partnerships. Prior to joining, all three executives worked at marchFIRST, formerly USWeb/CKS Corp. Stacy Kreisberg has been named vice president of business and legal affairs at Universal City’s Farmclub.com. She will be responsible for overseeing the convergence-media music company’s business legal matters. Prior to joining, Kreisberg was vice president of business and legal affairs at A & M; Records. Also, Larry Linietsky has been named vice president of business development. He will be responsible for negotiations involving strategic alliance deals, partnerships, content acquisition and distribution. Retail Howard Kaminsky has been promoted to executive vice president of finance at the La Canada Sport Chalet Inc. He will be responsible for the day-to-day financial management of the company’s management information systems, loss prevention/risk management and investor relations. Also, Jeff Lichtenstein has been promoted to vice president of loss prevention/risk management. He will be responsible for all areas of loss prevention, inventory control, and risk management, including store agents, collections, safety in stores and warehouses, and internal audit. Technology John Anderson has been appointed managing director of the San Fernando/San Gabriel Valley Manufacturing Technology Center. He will be responsible for the administration of the center and will lead a team of consultants in providing contracted services to small and mid-size manufacturers. Prior to his appointment, Anderson served as a California Manufacturing Technology Center project manager. Charlie Lombardo has been appointed national account manager at the Burbank office of CIT Systems Leasing. He will focus on providing equipment financing and leasing for large-ticket semiconductor, IT and TV/video production equipment for vendors as well as end-users. Lombardo is also commissioner and secretary of the Burbank-Glendale-Pasadena Airport Authority. Tourism Donna Houston has been named tour operator service manager for the Woodland Hills office of Viking River Cruises Inc. She will be facilitating contracts for tour operators, consolidators and wholesalers, as well as managing group bookings. Rob Rothmann has been named group sales manager. He will be working directly with group agents booking parties of 10 or more.