The Economic Alliance of the San Fernando Valley, The Valley Economic Development Center (VEDC) and a local developer have closed escrow on a $3.1-million office building in Van Nuys that, in addition to being their new home, could ultimately house several of the area’s prominent business associations. The building, at 5121 Van Nuys Blvd., appears likely to become the future digs of at least two of the Alliance’s strategic partners. Both the Valley Industry and Commerce Association (VICA) and the United Chambers of Commerce are finalizing details on rental agreements and aggressively seeking board approval to make the move. Two other Alliance partners the Valley International Trade Association and the San Fernando Valley Conference and Visitors Bureau now operate in the current Alliance headquarters at 15205 Burbank Blvd. in Van Nuys. Those groups will simply slide over to the new building with the owners sometime in March. With four strategic partners operating under one roof, said Bruce Ackerman, Alliance president, the groups will be able to coordinate services and programs. “We already have two affiliates coming over with us because they share space with us now,” said Ackerman. “But we’d love to get VICA and the Chambers in there because that would give us a rare opportunity to work more closely together. They are negotiating with their boards now and we’d be delighted to have them, because the advantage in having these groups come together is we would be able to strengthen our efforts in providing our services to the community.” Richard Leyner, senior vice president of NAI Capital Commercial Real Estate, served as the broker for the Alliance, the VEDC and Encino developer Rickey Gelb of RMG Management Co. The three will operate under the name Valley Corporate Community Center LLC., he said. Each of the three partners put up a third of the $600,000 down payment, said Leyner, who is also chairman of the board for the Chambers. He said the VEDC would likely occupy approximately 12,000 square feet on one floor of the building and the Alliance about 4,000 square feet on another. Gelb said he intends to take between 300 and 400 square feet of space in the new building for his philanthropic association, Rickey & Robbi Charitable Foundation, which secures scholarships for local high schools. He added that bringing the Alliance and the VEDC together “has been an idea of mine for many years.” Less is really more VICA President Bonny Herman said, though the space her group is looking to lease in the new building would be smaller than it now occupies, the shared offices, meeting rooms and kitchen and dining amenities would more than compensate. “I think this would work very well for us because what we are looking for together is to bring synergy to the business community and all of those who benefit from our services,” said Herman. “The quicker we can get things settled, the better for us all.” VICA currently leases approximately 2,000 square feet on Ventura Boulevard in Woodland Hills. Leyner said his organization hopes to share between 1,500 and 2,500 square feet with VICA, and has come close to an agreement on a lease price of $1.65 gross per square foot. The Alliance and the VDEC will pay $1 per square foot, plus approximately 60 cents per square foot for expenses. He added that he does not anticipate that his association board will object to the plan, but cautioned that approval is still pending. “All of these groups have boards they have to get approval from, including ours,” he said. “But we think there’s a lot of synergy by having these groups together under one roof. And I can’t imagine it not being acceptable because the benefit is so immense.” The Chambers market programs and services to the VEDC and coordinates 10 Valley business improvement districts for the Alliance, Leyner said. Roberto Barragan, president of the VEDC, said his association would be vacating its main headquarters about four blocks away. The VEDC also has offices in Pacoima, Ventura and Santa Monica, he said. Barragan said his association also recognizes the benefits of working in close proximity to the Alliance and other business groups. But, quite simply, he said, he needs the space. “We’ve increased the staff here at the main office from 25 to 35 and our programs have expanded over the last year,” said Barragan. The VEDC currently operates in about 9,000 square feet of space and would take up roughly half of 25,000 square feet in the new location, Barragan said. The non-profit organization provides Valley businesses with financing, consulting, training and workforce assistance. The Alliance is looking to secure roughly 4,000 square feet on the building’s second floor, he said. Ackerman said the Alliance has been courting The Valley Leadership Institute, also a strategic partner, but no firm rental offer has been hammered out. Should the Valley Leadership Institute lease space in the new building, that would leave two Alliance partners outstanding: the Small Manufacturer’s Council of California and the Southland Association of Realtors (SAR). Ackerman said SAR is unlikely to join in the move because it already occupies “more space now than they could get in the new building.” As for the Manufacturers Council, that’s another story. “Oh, we wouldn’t turn our heads to the idea of having them join us at all,” said Ackerman.

As the dust clears from the AOL-Time Warner, Inc. merger earlier this month, San Fernando Valley Internet users may have reason to cheer. Under an agreement with federal regulators, the new company will now allow other Internet service providers equal access to its cable broadband service in the Valley and throughout the country. The victory comes after public interest groups, Internet service providers and others, including Los Angeles City Councilman Alex Padilla (who represents the Northeast Valley), helped push the Federal Communications Commission for a so-called “open access” order. “Giving consumers a choice of an Internet service provider regardless of whether the Internet is being accessed by dial-up, cable or wireless is a necessary step to ensure that the gateways to content and information are kept wide open,” said Padilla, an open access advocate. In November, Padilla won approval from the Los Angeles City Council for his resolution asking the commission to mandate that cable companies offering broadband Internet services adopt an open-access policy. Padilla argued that in the Valley, in particular, AOL-Time Warner should give Internet service providers open access to the merged company’s cable services. The area, he says, has been growing in the number of Internet users who use a variety of service providers, all of whom would be shut out from the AOL-Time Warner broadband cable services. Kathy McKiernan, a spokeswoman for AOL-Time Warner, said the company is committed to open access and cited a memorandum of understanding that both AOL and Time Warner signed in June, calling for improved access by other Internet services. At issue are AOL’s 27 million Internet subscribers and Time Warner’s 12 million cable television customers, which combine to create a formidable force. Smaller Internet service providers may struggle to stay in business without AOL-Time Warner’s open access pledge. The San Fernando Valley has an estimated 315,000 households with Internet access, according to a 1999 study by the Economic Alliance of the San Fernando Valley. Although AOL-Time Warner would not say how many homes here are wired into its service, officials at one of its chief rival EarthLink, Inc. said they are pleased with the open access agreement with the FCC. “This decision will help ensure that consumers have choice in broadband Internet providers,” said Dave Baker, EarthLink vice president for law and public policy. “The guiding principle of the Internet has always been choice in access, in content and in applications.” A call for FCC action But Padilla said he hopes the federal regulators would seek similar agreements elsewhere. “The FCC should demonstrate its leadership by taking the next step, which would be requiring the same standards for all companies offering cable modem Internet service,” Padilla said. Under the agreement, the commission requires that rival Internet service providers be allowed to access the cable service, but consumers must be able to choose their Internet home page on the cable service and be able to have an account or other financial arrangement with a rival Internet service. Already, AOL-Time Warner has made an agreement with Atlanta-based EarthLink, its on-line rival, to give customers an alternative to its AOL service. New York-based Juno Online Services, Inc. is also in talks on a similar contract with the media giant. The EarthLink pact, some say, was key to helping speed federal approval of the mega-merger. That contract signals a marked turnaround from September when the smaller on-line service questioned AOL’s commitment to open access after a failed agreement. At the time, AOL offered EarthLink and others access to its cable line only if Time Warner received 75 percent of their subscription revenue and 25 percent of those from e-business and other revenue sources. EarthLink, which has 4.7 million subscribers nationwide, is followed closely by Juno, which has 3.7 million subscribers. Both, however, are dwarfed by AOL-Time Warner’s 27 million subscribers. It is unclear how many of these subscribers live in the San Fernando Valley. Padilla aide David Gershwin said the open access issue is especially important to Valley residents and businesses that are increasingly Internet-oriented. “This is an area that’s growing and more people are getting on the Internet, so we have to keep the access gates open,” he said. The issue was one of several that held up federal approval last year with a storm of criticism from rival Internet service providers and cable television rivals who claimed the merger would stifle competition. Analysts say AOL underestimated the stiff opposition it would face in its acquisition of Time Warner, further delaying final regulatory approval. The company later agreed to a number of concessions, including open access, and allowing EarthLink and Yahoo, Inc. to share its instant messaging system, which blocked messages from other Internet services with similar systems. These concessions were the key to winning merger approval, said Gene Kimmelman, co-director of Consumers Union, which publishes Consumer Reports magazine. “This should promote new competition for high-speed Internet services,” he said. Meanwhile, Michael Eisner, chairman of the Burbank-based Walt Disney Co., said in a statement that the open access pledge is a positive step for the new merged company. Eisner had been critical of the merger and sought stiff conditions from federal regulators. Disney officials were infuriated last year after its television network, ABC, was cut from Time Warner cable during the critical May “sweeps” period in New York and Los Angeles over a licensing dispute.

Bob funari has led syncor international into a new world of cutting-edge medical technology During the first two decades of its existence, Syncor International Corp. was synonymous with nuclear medicine. Not only did it pioneer the use of radiopharmaceutical drugs as diagnostic tools in the early 1970s, it pretty much dominated the industry. Over the last four or five years, however, Syncor has moved on, all the while holding to the original model of using cutting-edge technology to provide physicians with the means to diagnose disease. Only, it is doing so with medical imaging, sophisticated radiation techniques and something called the Gamma knife. That move into new technologies has apparently paid off. Shares in the company which were trading at about $27 apiece in early January soared to $75 in August before a two-for-one stock split. Stocks traded at the end of last week at $33. Sales for the last 12 months neared $600 million, almost double what they were six years ago. The guiding force in what he describes as a true culture change for a once-sleepy pharmaceuticals company is Bob Funari, president and chief executive officer since 1996. Funari said the company has tried to apply the set of skills it developed with nuclear medicine to a wider variety of technologies. In an interview with the Business Journal, Funari notes that one of the great challenges in Syncor’s most recent stage of growth was convincing those inside the company that it could teach itself a few new tricks. Question: For almost 20 years, Syncor was the industry leader in nuclear medicine. In the past six years, it has moved in what appears to be a new direction. Why the change of course? Answer: In the last several years, we’ve stepped back and said, “OK, this is what we’re good at doing, but guess what? We’re pretty narrowly focused.” You’re always faced with the prospect that somebody can come in and supercede nuclear medicine, so we need to think about how we can broaden the platform of our company. The first answer we came up with was the medical imaging business. Most nuclear medical procedures are diagnostic. We had some insight into what that would look like. We said there doesn’t appear to be a (medical imaging) model out there that’s particularly effective. It’s a huge market. The market for medical imaging was $48 billion last year. It’s growing 10 to 15 percent a year. We said, why don’t we see if we can’t move into that space, build a better mousetrap and essentially build a whole new business for our company that has huge potential for growth? We’re still putting the pieces together. When we’re done, I want to see a model that allows us to achieve undisputed leadership in every market where we compete. Q: How did you cope with the much higher capital cost of medical imaging compared to radiopharmaceuticals? A: It costs less than half a million dollars to open a lavish (nuclear) pharmacy. A medical imaging center would typically cost us $3 million. You have to be very, very good at utilizing your resources. It was a big change. Just the movement into a whole new business was a big change for this company. It left people feeling a little skittish. The first year, a lot of people had their doubts. It was a little bit of a controversial decision. Q: How has the health care field changed over the course of your career? A: I came into health care in 1975. Health care at that time was viewed as something inherently good and nobody worried a whole lot about how much it cost. Technology flourished, people came up with new technologies, they all got paid for it, it all got used and everybody was quite happy. It wasn’t until the 80s that people began to feel the crush of the growing burden of health care costs. Then you began to see some of the efforts of trying to control spending. That kind of moved into the ’90s when managed care became a much more significant player on the scene and that has kind of brought us to our current condition which I think is fascinating. In this country we’re still debating whether health care is a right or whether it is a service that you purchase for money. Q: What is likely to be the next stage in what appears to be an ongoing transformation of your company? A: One of the challenges we face is the explosive acceleration of the discovery of technologies. It’s going to be incredible over the next five or 10 years. We’re beginning to understand the genetic basis of disease. That’s huge. The discoveries we are making through genomic science are as revolutionary as the invention of the telegraph. Genomic sciences are going to be the springboard for a lot of revolutionary change in the way health care is used to diagnose health problems. We need to be at the forefront of that. Q: Where do you see the competitive pressure on Syncor coming from in the future? A: We won’t be the inventors of the technology per se. Our role is being the service enabler. We can deliver that technology to the physicians. I feel pressure to be looking upstream to see what’s going on inside the major biotechnology houses. We need to play a role to help them design products in a way that makes it easier to get to physicians and patients. Q: Will public policy changes accompanying a new presidential administration have an impact on the health care device industry? A: There are several things that are almost given, irrespective of who comes into office. There are a limited amount of resources available to pay for health care. At the same time, I don’t think we are nearly as effective at making appropriate use of technology as we could be. The biggest single thing we have to wrestle with in this country is this question of is it a right or something you purchase with money? If it’s a right, what is it? Is it prescription drugs, is it primary care, is it a set of services that everybody’s going to be entitled to have? What’s best for Syncor is for government to not attempt to create economic equilibrium by setting reimbursement policy below cost. Q: How does the international portion of your business differ from the domestic portion? A: We’re further ahead of the curve in some overseas markets than we are in the U.S. Many overseas markets are what I would call developing, emerging markets: Taiwan, Thailand, South Korea. Some more mature markets are Australia and New Zealand. These markets are more open to trying something different in the way of a health care service model. For instance, we are going to be managing a cardiac catheterization lab in Trinidad and Tobago. It’s a technology we don’t have any involvement with in the U.S. but it’s clearly a very complex set of technologies that we think a very strong service model can be wrapped around. We actually manage six nuclear medicine departments for hospitals in Taiwan. We’re going to operate a Gamma knife in Brazil. A Gamma knife is a device that puts a very precise dose of radiation into a tumor. We’re saying, can we push that envelope a little bit and bring that technology outside of a tertiary hospital? Q: What does it take personally to lead a company through the kind of changes Syncor has seen in the last few years? A: People look for a lot of things from their leaders when they’re going through change. They’re looking for a sense of confidence. They want reasurrance; they want a sense from the leader that this is the right thing to do. They want a sense of commitment. They expect a lot of communication. When we’re going through change, they want more and more communication from the top. You have doubts all the time. It’s a test of courage and it’s a test of your own convictions. You take your counsel all the time, you’re always questioning yourself. We’ve been in it now for about three years. Being successful gives you a sense that you can actually move outside the defined space into other space. We will get better at this. We will become more adept at managing change.

About a year ago, General Motors Corp.’s Gary Buch shook the Detroit snow from his boots and settled into his new job as show vehicle engineering leader for the company’s new California Concept Center in North Hollywood. He shook the dust off GM in the process. When the Greater Los Angeles Auto Show opened a few weeks ago, the Chevrolet Borrego, the first concept car developed at GM’s North Hollywood design studio, turned heads in a way the company had not done in years. The Borrego, combining tricked-out compact-car styling with the rough road performance of a sport utility vehicle and the cargo-carrying ability of a truck, got a strong nod of approval from car enthusiasts and industry pundits. With the introduction, GM became a player once again. “That vehicle is not as important in what it is as much as what it represents,” said Chuck Schifsky, executive editor of Motor Trend magazine. “I think the direction the Borrego shows is that they can design. They can do it.” In recent years, nearly every other automobile manufacturer has established design facilities in Southern California, where most believe auto trends begin. Like GM, most of the design centers are engaged in the development of innovative ideas that don’t always find their way to the production line, but those in the industry say the centers provide car makers with insights to market demands they can’t get back in Detroit, or in Asia and Europe, and that helps these makers build sales. GM’s design staff had worked exclusively in Detroit since its last Southern California design facility, in Newbury Park, was closed in 1996, limiting the company’s access to the best talent and affecting its market share for some of the industry’s most important segments, like the youth market. “It’s difficult to attract design talent to Detroit, Michigan,” said George Peterson, president of AutoPacific Inc., a Tustin-based automotive marketing research and consulting firm. “They also missed out on having their ear to the ground in terms of what’s happening. GM has been criticized for thinking the entire world revolves around GM and Detroit, Michigan.” Targeting a younger market GM’s cars have had little to offer 20- and 30-somethings, who represent about 100 million potential car buyers, market researchers said. According to J.D. Power and Associates, 30 percent of cars and 32 percent of trucks are purchased by people under 40. But at Chevrolet, only 26 percent of cars and 29 percent of trucks are purchased by buyers under 40. “It’s quite a bit lower than the industry average, so they are not doing as well among this age group as they are overall,” said Walter McManus, executive director, global forecasting for J.D. Power. Like its Detroit brethren, GM’s market share has been steadily declining in recent years as import makers have grown stronger. GM’s fourth quarter financial results reflected some of that weakness. Corporation-wide, the company reported earnings of $609 million, or $1.15 a share in the fourth quarter, down 52 percent from $1.26 billion or $1.95 a share for the same period in 1999. Sales dipped to $45 billion from $46.26 billion a year earlier. Although GM attributed most of the profit plunge to losses overseas, it said a decline in North American sales was also a factor. About a year ago, GM acquired a former bakery in North Hollywood, transformed it into a design studio and moved in about 30 designers, engineers and others who would serve as eyes and ears for trends and create prototypes, concept cars which manufacturers use to test the market for innovative styling and performance features. With its front-row seat to Southern California’s car culture and the lifestyle that shapes many of the designs geared to younger buyers, the GM designers and engineers began to see a growing segment of young drivers who were souping up Honda Civics and other compacts to drive at off-road events. They also came face to face with the lifestyle differences that fuel a demand for cars that can serve double duty for work and play. “The biggest difference is the cultural difference we experience daily,” said Frank Saucedo, a California native and director of the North Hollywood design center. “California has a long history of car culture year-round. We’re exposed to that daily, and I think it reflects in everything we do.” The new environment, with its funky, industrial-chic styling and its artsy surroundings in North Hollywood, also gave the designers and engineers a sense of freedom they say they would not have had in Detroit. “There’s an attitude of less constraint from being in the corporate world with people always looking over your shoulder,” said Franz VonHolzhausen, chief designer. “We’re not behind security walls and clocking in. We’re not told to dress in a certain way.” Back in Detroit, staffers usually wore Dockers or dress slacks. In North Hollywood, dress leans to jeans and shorts, a casual attitude that extends to work routines as well. “When I was back in Detroit, I would do a lot of communications using e-mails,” said Buch, who, while based in Detroit, spent weeks at a time in L.A. during the development of the Borrego. “We would have had another layer or two of documentation. Out here, I talk to Frank (Saucedo), he and I make an agreement. He tells his guys and gals and off we run.” The group’s first assignment, to develop a vehicle to appeal to the 20-something marketplace, began with a rough design from Detroit that looked pretty much like a pickup truck. The North Hollywood staff expanded on the idea, designing a vehicle that could transport its occupants to the ski slopes as easily as it drove the freeways. “The biggest thing that stuck out with me was the center in California was trying to get the pulse of California, and some of the comments they would make when we were talking about content and features. I would have said, ‘Wow, I never thought of that,'” said Buch. “In Detroit, I never thought of that because you don’t have the options where one minute you can be in the surf or one moment on the ski slope.” The Borrego is a compact with off-road capabilities that can also be transformed into a pickup truck by folding down its rear seats. The all-wheel drive vehicle is based on a Subaru platform, the result of GM’s 20 percent stake in Fuji Heavy Industries, which makes Subaru. It even comes equipped with an air hose to wash off the trail dust or sand after a day of hiking or surfing. “It was one of those vehicles that you looked at it and you wanted to get behind the wheel and go find a big dirt hill to drive up and down,” said Schifsky. “We see a lot of concept cars. The only time I’ve ever really felt that is with some high-end concept cars, maybe the Jaguar F-type roadster.” Like many concept cars, the Borrego may not be built for mass production at all, or it may be altered in its production form to meet specific cost guidelines.

In a little over a year since its current ownership group acquired it, Baja Fresh has doubled in size and revenue. The Westlake Village-based restaurant company founded about a decade ago has expanded from 49 units in a handful of states to about 100 company-owned and franchise stores in nine states with sales of about $160 million projected for this year. The chain’s success is due largely to its formula, a fast-food restaurant serving freshly prepared, healthful food at modest prices. The job of controlling costs while maintaining high levels of quality and managing the company’s stellar growth falls to its chief executive officer, Greg Dollarhyde. Staff reporter Shelly Garcia talked to Dollarhyde about his philosophy for running the company. “I have a phrase I use: people support what they help create. That is really the mantra. If you go around dictating, do this, do this, and everyone has to say, ‘Yes sir,’ they’ll do it, but they won’t support it. “I use a six-step program that is very successful to manage change. “The first step is to build the knowledge. “The second step is to develop a shared vision. Everyone has to share it, believe it and be willing to commit to it. “Once you do that, you realize that some of the old habits, the old values, the way people were compensated or benefited were outdated, so the third step is you really have to say, ‘If this is our vision, what do we need to change in our benefits and compensation and the way people are valued to align it better with the new vision?’ “Then you have to take those values one of the values is coaching and teamwork and ask, ‘What are we doing in concrete day-to-day behavior to support and execute that value?’ In other words, walk your talk. “Once you’ve figured out what those values are, the fifth step is to redirect power and authority and resources to support those new behaviors. You can’t walk your talk unless you apply mankind, money and materials. “Item six is make sure you are out there looking for and harnessing and executing high-impact management systems. If we say we’re going to put our money where our mouth is, and we’ve hired the people, they have to do something. They have to change what they’re doing day to day and find the best system to do that. “Then sit back and do it every day.”

A woodland hills clothier came up with a way to target men looking for a look that is as good as money can buy Some business executives work boardrooms. Some travel the world. Arturo Carlos Lewin rummages through closets. His job is to custom tailor clothing, mostly for business executives, and the first step is often weeding through a client’s existing wardrobe. The service is just one of several Art Lewin & Co. provides to clients, who typically plunk down about $3,000 on their first visit to the Woodland Hills shop. At those prices, customers expect not only a new suit, but the kind of head-to-toe service that may mean salvaging a favorite coat that’s seen brighter or lighter days. “If one of my clients calls and says one of my buttons fell off, I’ll go over there and pick it up and sew the button on,” said Lewin. “If they have weight gain or weight loss, I’ll go alter it. That’s what separates me (from traditional stores), that and I know who they are.” The company’s client list runs to 1,200 active accounts customers who make purchases anywhere from once a week to once a quarter accounting for about $1.5 million in sales in 2000, its fourth year in business. Lewin himself attends to about 700 clients personally, about 50 a week. Since its launch, Art Lewin & Co. has grown from a one-man operation with two part-time tailors to an organization with five sales representatives and nine tailors located in the company’s factory in downtown L.A. Lewin and his sales reps see clients in their homes, offices and the store, using swatch books of fabric from some of the most exclusive textile companies in Italy and England cashmere, wool, silk and linen from E. Thomas, Loro Piana, Ermenegildo Zegna, Gladson Ltd. and Roger Laviale among them. The average price for a custom suit ranges from $900 to $4,000. A custom shirt will typically run from $125 to $265. The company also provides made-to-measure clothing and coordinates the ensembles with ready-made ties. “We want to make an impact on their wardrobe and, in order to do that, one suit doesn’t cut it,” Lewin said. “We like to do at least a couple suits with six shirts and three ties for each suit. That way, you don’t have a uniform. You can pick and choose what you want to wear.” A Chilean native who came to the U.S. when he was 8 years old, Lewin started working for a custom clothier while he was still in college. After striking up a partnership at that company and disbanding it three years later, he went to work for The Custom Shop, a men’s chain specializing in made-to-measure clothing. In 1997, Lewin went out on his own, tapping all his credit cards to the tune of about $70,000. “I went from making a pretty good income to zero, but I didn’t think about that,” said the 33-year-old entrepreneur. Working out of a spare bedroom in the home he shares with his wife and then 8-month-old daughter, Lewin began telemarketing for clients using business directories for his prospect lists. He screened potential clients to determine their shopping and spending habits, a technique the company still follows. “I wanted to hear that they shop at Macy’s and up,” Lewin said. “If they’re shopping at Nordstrom, that was an ideal candidate. If they tell me they’re shopping at Neiman Marcus, I already know they’re paying $800 or $1,000 for a suit. I can offer them something competitive that’s custom-made for them.” Lewin picked up an astounding 400 clients in the first nine months of operation, enough to move the business out of his house into a small office and hire an additional tailor and four sales reps. For a time the business looked as if it would become heavily reliant on the entertainment industry, but Lewin prefers to work with law firms, real estate companies and investment firms. “Entertainment is too demanding,” he said. “I can’t get up at 4 in the morning and go see them or be there at midnight. I have a family.” Lewin has seen the inside of enough boardrooms to be able to offer advice on the colors and styles that are most appropriate to each profession, a benefit that also helps distinguish him from department stores and specialty shops. “When you go to Nordstrom, they don’t know who you are. They don’t know how you should dress. They just want to sell you whatever you like,” said Lewin. “I know you’re an attorney and you need to wear navy, gray and a couple of earth tones. I work with their skin tones.” Clients say Lewin’s expertise is a key element of the service, allowing them to make selections they would not make if left to their own devices. “I feel very comfortable with him,” said Barry Wolfe, president of Centrelink Insurance and Financial Services in Woodland Hills. “I’ll say, ‘Is this really OK?’ and he would tell me if it doesn’t look good. I like the suggestions he makes. He understands colors a lot better than I do. I’m wearing colors I never did before, and people say, ‘You look great.'” Then there are the house calls. “I have clients whose closets are as big as the whole store,” Lewin said. Sometimes he will alter or update the styling of a favorite jacket or suit. But mostly he tries to get his clients to discard clothing they no longer wear. “Clothing is one of the hardest things to throw away,” said Lewin. “The other day I was at a doctor’s house, and he had things from 15 years ago. I ask, ‘What haven’t you worn in the last year?’ and that cuts off a lot of things.” And those ties? According to Lewin, there are no ugly ties, just bad combinations. “What makes an ugly tie is when you combine it with the wrong colors or the wrong look,” he said. “You can put that same tie with something it should go with, and it will look good.”

Seeking to win over a market segment that has traditionally been suspicious of banks, Banco Popular will open its first San Fernando Valley branch this summer with an unusual twist full-service banking on Sundays. The new branch, to be based in the Plaza del Valle shopping center under development in Panorama City, is geared to the area’s large Latino population: mostly blue-collar families, many of whom don’t use banks at all. Puerto Rico-based Banco Popular hopes the seven-day-a-week schedule will lure converts by helping to promote its image as a customer-friendly bank that understands the needs of the population it serves. “What we found out from our current branches is many of our customers are two-income families, and traditional banking hours don’t work for them,” said Vernon V. Aguirre, California region executive for the bank. Commerce Bancorp, a regional bank headquartered in New Jersey with about $7 billion in assets, whose founder also owns a string of Burger King stores, is one of a very few banks that offers Sunday hours. Even Washington Mutual Co., which inherited a number of branches in grocery stores when it acquired Great Western Bank in 1997, closes those branches on Sundays. But for Banco Popular, particularly in a location like Panorama City, staying open Sunday offers the chance to cement its relationship with Hispanics, who account for about 50 percent of the bank’s customer base. “Large portions of the Hispanic population have traditionally not used banks period,” said Joseph Gladue, an equity analyst with The Chapman Co., an investment firm in Baltimore. “So, probably having a physical presence and going out of your way to make things convenient and friendly for people is one way of breaking down the mistrust of people of financial institutions.” Founded in Puerto Rico about 100 years ago, Banco Popular entered the mainland United States market in the 1950s with branches in New York, New Jersey, Florida, Texas and Illinois. The bank expanded into California in the 1970s and currently operates 16 branches in Los Angeles, Orange County and Chula Vista near San Diego. The right location Banco Popular was seeking a Valley location for some time when it came upon the Plaza del Valle site. The redevelopment project underway by Agora Realty Management and Construction is designed to capitalize on the population of about 650,000 people, largely Hispanic with an average income of $40,000, that live within a five-mile radius. Plaza de Valle will feature small retail shops, family restaurants and other entertainment venues and office buildings for social services like job training. The center will also have the kinds of open-air markets and gathering places typically found in town squares south of the border. “The location meets the needs of both heavy traffic, heavy Hispanic community and strong business community,” Aguirre said. Banco Popular, with more than $27 billion in assets, employs a number of strategies geared specifically to the Latino community. Each bank branch displays the flags of South and Central American countries, and caters to the Latino preference for face-to-face relationships by employing full-time tellers that get to know customers by name. “Many large banks have part-time employees,” said Aguirre. “It’s hard for the customer to have a relationship with part-time tellers. They’re constantly being asked for I.D. They’re constantly being scrutinized. When you get to know somebody on a personal basis, you call them by name, you ask how their kids are doing.” The strategy has worked well. For the quarter ended Dec. 31, 2000, Popular, Inc., the bank’s parent company, reported that net income increased nearly 15 percent to $75.5 million or 54 cents per share, compared with $65.7 million or 47 cents per common share for the comparable period in the prior year. Net interest income for the quarter rose 15 percent to $558.4 million, compared to $485.5 million for the like period in 1999. Revenues from other income rose 17 percent to $119.3 million from just under $102 million in the same quarter last year. But the bank’s Sunday strategy has not always been successful. An earlier attempt at a seven-day-a-week schedule at a Huntington Park branch was scuttled when Banco Popular found there was not enough traffic to support the expense of the Sunday opening. Aguirre attributed the problem in Huntington Park to the location of the branch, a sparsely-traveled sector of a shopping center. He plans to reopen the branch on Sundays when Le Curasao, a furniture and electronics retailer that caters to the Latino community, moves into the center later this year. Plaza del Valle, on the other hand, is surrounded by the Panorama Mall and El Super, a Latino supermarket, and should draw large crowds of shoppers as a result. In addition, the bank branch will share the 5,500-square-foot facility with another of the company’s divisions, Popular Cash Express, a 24-hour check cashing service. Aguirre said he expects the synergy between the two businesses to help build the bank’s customer base. Many Latinos prefer to use check-cashing services instead of traditional banking because of their experiences in their home countries, where banks are often embroiled in the country’s politics. “Recent immigrants do savings, but they do it at home under the mattress,” said Aguirre. “They also believe that some banks aren’t very interested in them as customers.” But by combining the check cashing with traditional banking services, officials said they hope that many customers will be persuaded to give the bank a try. “This is what the pilot is all about,” Aguirre said. “To what extent are we able to take a customer of Popular Cash Express and move them along the financial services path, beginning with a secured credit card to basic savings accounts and other services?”

Sometimes perception really does mirror reality even if the reasoning is obscured. Look at Countrywide Credit Industries’ stock chart for the last year and you’ve got to believe the gigantic Calabasas-based financial services firm is doing something right. Countrywide started 2000 with its stock trading at just under $24 a share. By the second trading day of 2001 it had steadily climbed to $51 a share. After all, Countrywide is the nation’s third largest provider of home loans. The Federal Reserve Bank cut interest rates the same day Countrywide’s stock hit its high and the refinancing business is better than ever. Even industry experts say the lower interest rates and the refinancing trend mean business is bound to be good for mortgage giants like Countrywide. Kenneth Posner of Morgan Stanley Dean Witter Discover & Co. said, if the economy does end up taking a “hard landing, “a sizable refinance boom becomes highly likely.” And David Bigelow, Countrywide’s executive vice president for strategic planning, said, “A lot of investors do perceive our success as being tied to interest rates.” In fact, Countrywide’s net income for the third quarter of 2000 was actually down 5 percent from the year before, a phenomenon Bigelow calls “unusual.” “We were actually in an environment where rates were rising,” he said, “and there was an accounting adjustment we made.” In the quarter ending Nov. 30, 2000, Countrywide reported net income of $95.4 million (87 cents per share), down from the $100.6 million (84 cents per share) reported in the same quarter a year earlier. A lot of things have changed since then. Countrywide did $1.9 billion in refinancing business during December 2000, up 91 percent from December 1999. That surge pushed its total mortgage funding up to $6.2 billion, a 48 percent increase over the same month last year. Refinancing applications amounted to $3.7 billion in December 2000, compared to $1.6 billion a year earlier. Countrywide has $9.9 billion worth of refinancing business in the pipeline, up 41 percent from the same period a year ago. Industry experts, however, say that refinancing activity can be deceptive when you try to link that business to a company’s bottom line. Often, a refinanced mortgage results in little more than a one-time fee for churning a loan. Other times, the loans a company picks up are countered by the loans it loses to other mortgage companies who are also picking up the refinancing business. Indeed, Bigelow said, “If we do get into a refinance boom over an extended period of time, the challenge we face is you have to work to maintain market share.” Nevertheless, he went on, “When you’re in the mortgage business, it’s always exciting when you get into a period of activity when you’re very, very busy.” It may get busier too. David Berson, a Fannie Mae economist, said, “Right now, another two Fed lowerings are built into rates and so we are probably going to see mortgage rates around 7 percent. “The mortgage industry is going to be amazed.” What could also be amazing for Countrywide’s bottom line, anyway is the amount of business coming to it over the Internet. E-commerce funding was worth $2.5 billion to Countrywide last month. “This is the first time in company history that e-commerce has accounted for 40 percent of total funding volume,” said Stanford Kurland, Countrywide’s chief operating officer. By comparison, Internet lending business in December 1999 amounted to 19 percent of the company’s funding. While the argument can be made that increased Internet business reflects merely a change in the way consumers are doing their mortgage shopping rather than a real increase in business, Bigelow said, “It’s us wanting to shift people that way. It creates efficiencies for us.” Principal subsidiaries of Countrywide include Countrywide Home Loans, Inc., which originates, purchases and services home loans; Full Spectrum Lending, a sub-prime residential lender; Landsafe, Inc., a provide of loan closing services; and Countrywide Insurance Services, an insurance agency.

The West Valley’s health care community continues to spread its wings. Blue Cross of California just inked a deal for 47,000 square feet at West Hills Corporate Pointe, the commercial park under development by Trammell Crow Co. at 8433 Fallbrook Ave. Blue Cross, which has its headquarters in Warner Center, will be expanding its offices into the new facility in a 10-year lease valued at $11.5 million. Blue Cross will occupy the ground floor of one of six buildings in the complex, which is currently under renovation. The lease brings the occupancy at Corporate Pointe to 40 percent, said Mark D. Leonard, principal and senior vice president at Trammell Crow. Other tenants include MRV Communications Inc. and Recycler. The complex consists of six buildings, including a 50,000-square-foot build-to-suit. Mark D. Leonard at Trammell Crow Co., along with Ron Wade, Mark T. Leonard, Matt Hargrove and Margaret Fichter at Cushman & Wakefield Inc., represented the development. Allen Trowbridge with Jones Lang LaSalle represented the tenant. With the lease, Blue Cross becomes the latest health care company to expand or relocate. Health Net recently inked a deal to relocate its corporate offices to LNR Warner Center. The company has been located in the Trillium. Warner Center has been considered a hub for health care, housing such companies as Aetna, Foundation Health Systems and Wellpoint Health Networks Inc. Former Dole HQ Leased Guitar Center Inc. leased the former Dole Foods facility in Westlake Village in a transaction valued at $6 million. The music equipment retailer, which is relocating from Agoura Hills, will set up its corporate headquarters in the facility at 5795 Lindero Canyon Road. Michael Slater and Tom Dwyer with CB Richard Ellis Inc. represented Guitar Center in the eight-year lease. Ken Ashen and Nick Gregg, also of CB Richard Ellis, represented the landlord, J. David Gladstone Institutes. Fourth Quarter Strong Office vacancy rates in the San Fernando Valley continued to inch downward in the fourth quarter of 2000, despite some evidence that the demand that fueled the market earlier in the year has cooled considerably. Overall, office vacancy rates in the Valley declined to 9.8 percent from 10.8 percent in the third quarter of the year and 11 percent for the comparable quarter last year, according to data recently released by Grubb & Ellis, Inc. The latest numbers reflected net absorption of over 530,000 square feet, indicating that a great deal of the new space that had come on line in the third quarter has been leasing briskly. Space was tightest in the Central Valley, which recorded a vacancy rate of 7.8 percent, the Grubb & Ellis report revealed. But the East Valley, with 8.1 percent; West Valley with 9.2 percent; and Conejo Valley, with 9.7 percent; all saw vacancy rates fall to single digits in the period. Only the Santa Clarita Valley, which has been slow to lease its office space, had significant vacancies, with rates at 33.2 percent. Consistent with the tightening in vacancy rates, rental rates continued to move higher during the last quarter of 2000. Asking rents for Class A office space averaged $2.27 per square foot throughout the San Fernando Valley, compared to $2.13 per square foot for the third quarter of last year, Grubb & Ellis reported. The biggest jump occurred in the East Valley, where rents rose by 10 percent to $2.54 per square foot. The West Valley also saw a substantial rise of 7 percent to $2.48 per square foot for the period. San Fernando Sale GMS Realty LLC acquired a shopping center in the city of San Fernando for $8.7 million. The 67,000-square-foot San Fernando Mission Plaza is anchored by Value Plus Food Warehouse and Hollywood Video. It is 100 percent occupied. Center Trust Inc. was the seller. GMS also owns Canyon Plaza, a shopping center in Sun Valley. Northridge Lease Child Care Resource Center has leased 14,000 square feet of office space at The Centre at Harman International Business Campus in Northridge. The five-year lease is valued at $1.65 million. The Centre is a 125,000-square-foot office building at 8510 Balboa Blvd. Rick Pearson at CRESA Partners represented the tenant. Mark D. Leonard at Trammell Crow represented the landlord. Speculating in Westlake Opus West Corp. has begun construction on Westlake Village City Center, a 132,800-square-foot office complex at 31111 Agoura Road. The speculative project will consist of two buildings, each 66,400 square feet. Construction is scheduled for completion in September 2001. Opus West acquired the property from Raypak Inc. last September. Nicholas Gregg and Ken Ashen, brokers with CB Richard Ellis, will market the development for Phoenix-based Opus West. Thousand Oaks Lease Medtronics, a maker of three-dimensional and holographic images, has leased a 7,042-square-foot industrial facility at the Grande Vista Business Park in Thousand Oaks. The five-year lease is valued at $440,000. Medtronics will relocate its sales and distribution operations to the new location. Tony Principe and Jim Darin of Westcord Commercial Real Estate Services represented business park owners Burke Real Estate Group. Staff reporter Shelly Garcia can be reached at (818) 676-1750, ext. 14 or by e-mail at [email protected].

Allow me to introduce the Lottery Effect, the greatest mixed blessing in 401(k) plans. As a blessing, it can make your retirement incredible. As a flaw, it can keep you working until you’re 99. My first personal encounter with the Lottery Effect was last fall, after making a speech to a large group of retired Texas Instruments employees. Following the speech, I listened as a retiree asked a TI executive what she should do with her 30,000 shares of Texas Instruments. We are not talking about an executive here. We are talking about a working stiff. None of her shares had come from employee stock options. She had simply accumulated her shares by working many years and by participating in company savings plans. Her share holdings increased each time the stock split, which it has done four times since 1995. She had the good fortune and smarts to join one of the oldest high-tech companies in America, a primo bastion of intellectual capital. More important, she had stayed with it through thick and thin: through embarrassments the company suffered in consumer markets, through the sale of the defense businesses the company had acquired and through the endless cycles of the semiconductor industry. That night, TXN closed at $60. Her shares were worth $1,800,000. She was worried, she said, because the stock had been as high as $100 a share in the spring and it had been falling ever since. At $100, her shares had been worth $3 million. As the year closed, TXN was trading at $47 3/8. So it could be said that she had lost nearly half a million dollars between Labor Day and Christmas. In fact, I doubt that it bothers her or TXN retirees in similar positions very much. Whether she has $3 million or a mere $1,350,000, she still has more money than she ever expected to have. Unfortunately, the Lottery Effect has also had a dark side. Some stocks go down. Some disappear altogether. Many companies contribute shares of their own stock as employer-matching contributions to 401(k) plans. J.C. Penney shares, for instance, have plunged from a high of $77 & #733; on April 1, 1998 to a year-end close of 10 7/8. That’s a loss of 86 percent. It also means that every share of JCP held in the company’s 401(k) plan is now worth pennies on the dollar. Rank-and-file employees, who number some 291,000, have lost millions. Worse, some are facing forced retirements as the retailer grapples with its problems. Ironically, this is the same company whose board of directors rewarded the outgoing top management team with multimillion-dollar going-away contracts, an act that is the equivalent of giving million-dollar cashier’s checks to the captain and officers of the Exxon Valdez as compensation for running the ship aground. The problem here the one likely to get government attention is that J.C. Penney isn’t alone. A recent blurb in Forbes magazine on the subject of big but sinking 401(k) plans also mentioned Verizon, Sprint, Textron, Caterpillar and PPG Industries. In fact, the number of companies with “distressed” shares in their 401(k) plans is probably in the hundreds. Nor does a company’s share price have to collapse to be a long-term threat to employee retirement security. All it has to do is underperform the market for a long time. Over the last five years the S & P; 500 index has provided an annual return of 18.66 percent, while the average of 6,589 domestic companies in the Morningstar stocks database has provided a return of 2.43 percent. Over the last 10 years, 740 of the 2,285 domestic companies with 10-year records have provided annualized returns of 6 percent or less. This means millions of workers have essentially missed the greatest bull market in history, simply because their employers contributed company stock instead of cash that could be more broadly invested. Is there a way to avoid the Lottery Effect? Not while many companies meet their matching requirements with shares of company stock. Is this a serious issue? Absolutely. Years ago, traditional defined-benefit pension plans the kind that take responsibility for investing and deliver retired employees a monthly check for life came under fire because only some employees got pensions. Others were closed out altogether or received reduced pensions because they had changed jobs. Congress held hearings. Laws were changed. Plans were reformed and regulated. Indeed, pensions were so well-regulated that the traditional DB pension is now the dodo bird of employee benefits. Their population declines year after year. The Lottery Effect introduces the same kind of uncertainty to the rising world of defined-contribution 401(k) plans. Sometimes it’s feelings, not numbers Question: I am retiring. My problem is whether to take a lump sum or a monthly annuity. I have talked to several money managers and they all say the same thing: They all want to manage the lump sum for me. My package is around $400,000 if I elect the lump sum, or it will be about $3,300 a month for the rest of my life. I am 65 and in excellent health. My wife and I have around $600,000 in the stock market, mostly growth funds. I have about $150,000 in an IRA, and my Social Security will be about $1,400 a month. We also own three rental houses that are paid for plus our own home, mortgage-free. I am inclined to take the monthly payment. We would not have to make a significant change in our lifestyle on $4,700 a month. My wife isn’t sure. She is eight years younger than I am and worries about what she would live on when I die. What do you say? T.S., by e-mail Answer: Talk with the benefits manager where you work. While most defined-benefit pensions are offered in the form of a “life only” option a monthly income that ends when you do you can’t take that option without a specific sign-off from your spouse stating that she understands the consequences of the life-only decision. Most retirees choose the “joint and survivor” option. This pays a monthly benefit for the worker’s life, followed by a reduced benefit for the surviving spouse. Typically, the survivor benefit is 50 percent to 75 percent of the joint benefit. . While I agree with your feeling that there are sufficient assets to take care of your wife after your death, you need to address her feelings with some more specific plans about how her income will continue in the event of your death. Then you can both relax. Questions about personal finance and investments may be sent to Scott Burns, The Dallas Morning News, P.O. Box 655237, Dallas, TX 75265; by fax: (214) 977-8776; or by e-mail: scott(at)scottburns.com. Check the Web site: www.scottburns.com. Questions of general interest will be answered in future columns.