JOYZELLE DAVIS Burbank’s Media District has made news in the past with proposed new office developments and its effectively non-existent vacancy rate. But until last month, acquisition activity in the entertainment industry’s corporate epicenter had been notably quiet. That changed with such big October deals as the purchase of the 2600 West Olive Building by CarrAmerica Realty Corp., a Washington, D.C.-based real estate investment trust, for about $26 million, according to real estate sources. The 10-story, 145,000-square-foot building is 100 percent leased, with Walt Disney Co. leading its tenant roster. This marks CarrAmerica’s first purchase in the Tri-Cities office market, according to Dwight Merriman, the company’s vice president for the Southern California region. CarrAmerica became interested in the property because it’s within walking distance of Disney’s world headquarters and “it has a decent number of amenities for the Burbank market,” Merriman said. Meanwhile, Westwood-based investment group Douglas Emmett Realty Advisors recently purchased the office building at 2901 Alameda Ave., located across the NBC Studios lot from Ford Motor Credit. Sources close to the deal say the 110,000-square-foot building went for about $22 million. That building is also 100 percent leased, with the post-production company 4 Media Corp. taking up the bulk of the space. Considering the scant acquisition activity in the Media District, there are not any recent sales to use as a benchmark for these deals, said Scott Blake, first vice president of California Federal Bank’s commercial real estate division. He noted, however, that the 2901 Alameda building was going to be sold last year for about $17 million, but that deal fell out of escrow and the building returned to market. One year later, it sold for 30 percent more. Larry Rappoport, a principal with Lee & Associates in Sherman Oaks who represented the seller in the 2600 West Olive transaction, said Media District property owners had been reluctant to sell their properties during the past year. But as the continued growth in the entertainment industry has propelled the demand for new office space, prices for Burbank office buildings have risen and more owners are willing to consider selling at a “fair price or what some might say is more than a fair price,” Rappoport said. Elsewhere in Burbank The M. David Paul Development Co. began construction on the second phase of its Media Studios North office project, which is located on a 19-acre site adjacent to the Burbank Airport. Now Phoenix-based Vestar Development Co. is moving ahead with its plans to develop a project called Burbank Empire Center in the same neighborhood. Vestar announced the selection of a team led by Kilroy Realty to develop the office portion of Vestar’s site. The 101-acre site, which formerly housed the Lockheed Corp. manufacturing facilities, is to include retail as well as office development. Kilroy, a real estate investment trust based in El Segundo, will develop the office property in partnership with Orange County-based Koll Real Estate Group. An environmental impact report is being prepared for the project and should be ready for circulation by early next year, according to a Vestar spokesman. The proposed Empire Center is designed ultimately to have about 1.8 million square feet of buildings, including about 600,000 square feet of retail space, 150,000 square feet of auto dealerships and 1 million square feet of offices. The cost of the entire office and retail portions of the development is estimated to be $250 million. The Burbank Airport-area office market isn’t quite as tight as the Media District, although its single-digit vacancy rates are among the lowest in the county. The airport market hasn’t attracted large corporate users in the past, but that may change as Vestar’s and M. David Paul’s new buildings enter the market, some brokers say. Before the end of the decade, companies will have several opportunities to lease large blocks of contiguous space in Burbank which hasn’t been possible for most of the decade. The J.H. Snyder Co.’s almost 600,000-square-foot Burbank Media Center, which is scheduled to break ground this month, is asking for rents comparable to its Media District neighbors monthly rates around $3 per square foot. By comparison, the M. David Paul project is asking for rents of about $2.45 per square foot. More development news Senior Systems Technology Inc. broke ground last month on its 130,000-square-foot build-to-suit headquarters in Palmdale. The company has not yet decided what it will do with its 55,000-square-foot office at 20150 Sunburst St. in Chatsworth, where it’s currently housed. Dennis Marciniak, a broker with Daum Commercial Real Estate Services who represented Senior Systems when it bought the land from the city of Palmdale, said the size of the company’s staff has expanded so rapidly that it is considering using its Chatsworth building as a regional office. Residential action Los Angeles-based residential development company Greystone Homes bought Burbank-based West Venture Development Co. for roughly $20 million, adding five active projects and the option to develop about 1,900 lots in Los Angeles County and the Inland Empire to its portfolio. The acquisition positions Greystone Homes in some rebounding markets such as Palmdale and Valencia where it does not currently have a presence. The company will continue to operate under the West Venture name. The deal comes as Greystone is in the process of being acquired by Miami-based Lennar Corp. In more news on the home front, the number of existing single-family homes sold in the San Fernando Valley in September rose for the fifth consecutive month. The Southland Regional Association of Realtors reports that total Valley home resales from January through September are already 7.3 percent ahead of the like period of 1996, raising the possibility that 1997 will end as the best year for Valley home resales since 1987. September single-family existing home sales totaled 1,084, up more than 26 percent from September 1996. September also marked the fifth consecutive month that Valley home resales topped 1,000, a level of resale activity that has not occurred since 1989.

FINANCIAL ISSUES TO BE SPOTLIGHTED AT VICA BUSINESS FORECAST CONFERENCE AND ANNUAL MEETING, FRIDAY, NOVEMBER 14 by Laurie Golden George Vradenburg, III, senior vice president and general counsel of America Online, Inc., State Treasurer Matt Fong and Los Angeles Mayor Richard Riordan will be the keynote speakers at the Valley Industry and Commerce Association (VICA) Ninth Annual Business Forecast Conference and the 47th Annual Meeting and Luncheon on Friday, November 14th. At the VICA luncheon meeting, Mayor Riordan will give his “State of the Valley” address. George Vradenburg, III, who was named senior vice president and general counsel of America Online, Inc., and a member of the office of the chairman in March 1997, will be the keynote luncheon speaker. Mr. Vradenburg has extensive transactional, litigation and regulatory expertise in various sectors of the entertainment industry. He was at the vanguard of two broadcast networks, as senior vice president and general counsel at CBS, Inc., and executive vice president at Fox, Inc., during critical periods of the industry from 1980 to 1995, and is a frequent speaker on technical, trade and social issues of communications and entertainment. Mr. Vradenburg represented the motion picture industry in the December 1993 GATT negotiations in Geneva and has testified before congress on industry matters. He received his BA from Oberlin College and his JD from Harvard Law School. California State Treasurer Matt Fong will be the Keynote Breakfast Speaker for the conference. His discussion will focus on the economic health of the state and the prospectus for L.A. County. The breakfast meeting will then be followed by three industry workshops on Real Estate, Electric Deregulation and Entertainment Technology. Randy Hoffman, president of Magellan Systems Corp., will moderate the VICA panel on the Real Estate Forecast. Participants include John Cushman, III, president and CEO of Cushman Reality Corp.; Jerry Katell, president af Katell Properties; and Larry Kosmont, CRE principal of Kosmont & Associates. Daniel W. Douglass, an L.A. attorney who specializes in energy law issues and was formerly with Southern California Edison, will moderate the second workshop on the “Electric Deregulation Impact on Business.” Speakers include S. David Freeman, general manager of the L.A. Department of Water and Power, George Miner, director of Public Policy and director of Corporate Communications for Pacific Enterprises; and Barry Sedik, manager of Economic and Business Development at Southern California Edison. Ellen Fitzmaurice, co-chair of the VICA telecommunications and Technology Committee and founder- principal of MindWorx, will moderate the third workshop on Entertainment Technology. Workshop participants include Greg A. Granello, president and CEO of EDS Digital Studios, Inc., who will cover the topic of emerging technologies in post- production and digital- content entertainment; Paul Rioux, president of Universal Studios New Media Group who will discuss innovations in the interactive sector; and Mackenzie Waggaman, executive producer of MEDIALAB Studio L.A., who will be speaking on virtual technology and “motion capture animation.” The Grand Sponsor for the VICA Business Forecast Conference, Annual Meeting and Luncheon is the Los Angeles Times, Valley Edition. The co-sponsors are Imperial Bank, Kaiser Permanente, Magellan Systems Corp., and Time Warner Communications. Grant Thornton, LLP, is sponsoring the VICA Breakfast Meeting with State Treasurer Matt Fong; Lockheed Martin, the “Real Estate Forecast” panel; DWP, SCE and The Gas Company, the workshop on the “Electric Deregulation Impact on Business”; and Pacific Bell, the panel on “Entertainment Technology.” Robert J. Pearlman, a Client Service Partner and partner-in-charge of the Manufacturing and Distribution Industries Services Group in the Southern California offices of Grant Thornton LLP, is the Chairman of the VICA Business Forecast Conference. The event is scheduled to last from 7:30 a.m. to 2:00 p.m. at the Warner Center Marriott Hotel, 21850 Oxnard Street, Woodland Hills. Registration begins at 7:00 a.m. More than 600 civic and business leaders are expected to attend the event. The cost of the conference is $95 per person, and includes breakfast, lunch, parking, all event seminars and access to more than 50 VICA member exhibits. Luncheon only, $60: for reservations, call (818)888-2228/ Laurie Golden contributed this article on behalf of the Valley Industry and Commerce Association, a nonprofit and nonpartisan business advocacy organization founded in 1949. The mission of VICA is to encourage the economic vitality and growth of the greater San Fernando Valley region and to define, advocate and promote the agenda of the area’s business commnity.

NON-PROFIT SPARKS QUAKE RECOVERY WITH BUSINESS LENDING by Bruce Dobb and Roberto Barragan In January l994, the San Fernando Valley was hit with the largest urban disaster in the history of the United States. The 5th largest economy in the country suffered $ 40 billion in damage, an immediate drop in population and the business disruption or shut-down of over 100,000 large and small businesses. Bank lending virtually ground to a halt as financial institutions accessed their damages and sorted through insurance coverage. Because over 50% of all businesses that initially applied to FEMA and the SBA for assistance were declined, their emerged a need to provide additional credit resources to the community. The Valley Economic Development Center(VEDC), at that time a small, non-profit Chamber of Commerce spin-off, requested additional assistance from the Federal government. VEDC designed a relief program that is open to all quake impacted companies. Known as the Financial Restructuring Assistance Program (FRAP), this revolving loan fund program was funded by the Economic Development Administration and the City of Los Angeles in October of l994 with a $ 7 million grant to VEDC. To date, VEDC has approved $ 12 million of loans under this program, funded $ 7.5 million and created or saved 1,500 jobs. These jobs have been for businesses ranging from clothing manufacturers, electronic parts assembly firms to restaurants and retailers. Companies receiving loans have had as many as 230 employees and as few as 2. But they all shared one characteristic, they represented healthy, thriving businesses that are part of the Valley’s recovery processes. In several cases, VEDC took a risk that private investors were either unable or unwilling to make. We financed recent acquisitions, new product development, debt consolidation or contract receivables that were outside of a traditional bank’s lending parameters. But in every case the risk was justified by solid repayment with few delinquencies or defaults. Not one dime of the original grant funds have been lost. The success of our portfolio reflects the overall success of the Valley’s recovery in general. Specific examples are many: Eclectic Cafe started as bar and grill in an area of North Hollywood along Cahuenga Blvd. that had little night life and few nearby places to eat. Annual revenues have more than doubled since it restructured its quake related debt with a VEDC loan. The restaurant has added 5 people and is planing a major expansion. The area since become known as NoHo and is thriving. Cownan Precision was denied an SBA Disaster Loan because the Agency ruled that the company was unable to repay new debt. VEDC lend the firm $ 180,000 to buy equipment based on solid projections and a strong track record by the owner. Our loan allowed the company to diversify its customer base, enhance revenues and hire two new employees. Ricon, Inc., the wheelchair lift manufacturer in Pacoima, was able to hire 100 new employees immediately in order to launch it’s auto van conversion program. Without a VEDC $ 695,000 loan the company would have required 18 months to fully activate this new division. Some 65 companies are currently in VEDC’s portfolio. In many cases these companies have been referred to VEDC by a Bank Lending Partnership which was formed in l996 to spur new investment in San Fernando Valley Companies. Sixteen banks ranging in size from billions in assets to under $ 200 million agreed to target their lending to Valley businesses and this effort has sparked over $ 20 million in new investment. VEDC has also been selected as a lending partner for the Los Angeles Community Development Bank and is presently making loans under $ 25,000 to businesses located in Pacoima, East Los Angeles and parts of Downtown Los Angeles. This program is currently restricted to businesses located in the federally designated Empowerment Zone, but VEDC hopes to expand it into a county-wide micro-lending program by the Spring of l998. Because the capital needs of growing companies have continued to change since January of l994, VEDC has started to explore new sources of investment dollars. We underwrite limited partnerships, private placements and other types of equity or near equity of investments. We also serve as investment advisors for transactions ranging from mergers and acquisitions to Industrial Revenue Bonds. The San Fernando Valley has the largest, most entrepreneurial and diverse business community in the nation. Thirty percent of VEDC’s loans are to minority owned businesses. In aggregate these companies represent an extremely dynamic and growing segment of the local economy. VEDC hopes to carve a unique niche in the financial markets by continuing to service the credit needs of these companies. Our success is largely due to the diligence and dedication of an all volunteer loan committee, a hard working staff and the good fortune of being able to serve the San Fernando Valley. We appreciate that opportunity. Bruce Dobb is chief credit officer for the VEDC. Roberto Barragan is Vice President of lending operations for the VEDC.

COST-EFFECTIVE BORROWING: FACING THE NEED FOR MONEY Borrowing tips for small businesses from the San Fernando Valley Business Journal Your business plan is working and your company is growing. Now you realize that the second most important ingredient to fueling growth is raising capital. As a small business owner, here are some ways to manage your borrowing costs and obtain more loan funds. * Some of the more obvious assets you have may include your company’s cash flow, personal credit cards and your individual retirement account. In addition, you may also be able to borrow on the strength of your character, management experience and customer contracts. * The best way to cultivate a relationship with your local bank is to establish a rapport before you need money. That includes maintaining balances in your accounts, not overdrawing your checking account and not using uncollected funds. * Credit card loans are unsecured by the typical interest rate of 18%. * Your checking account may help you get a bank overdraft line of up to $10,000. This line of credit allows you to issue checks for more than you have on deposit up to an agreed amount. * Initially consider looking to friends and family members for loans. Loans from this group may carry a lower interest rate than commercial loans or no interest at all. * Next look to banks and finance companies. The small business community is the fasted growing segment of the financial market today. Nearly one-half of outside financing for small business comes from commercial banks. * Finance companies and banks usually require personal guarantees and collateral. A source of collateral for a loan is your home. The approval rate for a home equity loan is much higher than for the average business loan because of its lower risk to the lending institution. If you can’t repay the loan, the lender of a home equity loan could foreclose on your house. Interest on a home equity loan is tax deductible. * Credit grantors sometimes will grant a loan that is secured by a passbook or securities and a personal guarantee from the borrower and often the member of the family who may have control over family assets. * A credit grantor looks for a successful manager with a strong resume, a good credit history and a track record that is without negatives. This is called “Character” and is given more weight then the collateral which is usually required. * Another business source are economic development programs provided by state and local government devoted to the needs of smaller businesses. These agencies make millions of dollars available for loans and/or loan guarantees. Although most of the loans are made by banks, rather tan directly form the government agency, up to 85% of a loan is guaranteed by the Federal or State government. * In previous issues we discussed the LOWDOC program. Which is sponsored by the U.S. SBA and offers a simple quick approach to borrowing. * Recently there has been a surge in independent finance companies formed to provide asset-based loan and factoring to small companies. Asset-based lenders essentially make loans against accounts receivable, inventory or equipment that the lender can liquidate in the event of a default. For example, an asset-based lender generally extends up to 80% of non-delinquent accounts receivable and interest rates range from 14% to 50%. In summary, loans are based on character, managerial experience and collateral. Loans cost money, but look for the optimal combination of price and terms, to manage your borrowing costs wisely.

TIPS FOR NEW BUSINESSES: WHAT BANKS ARE LOOKING FOR by Todd Gavin Banks and institutions that lend money have a lot of knowledge about the success rate of small businesses. Bankers are often overly cautious in making loans to small businesses. For that very reason, it makes sense to study their approach, even though it may seem discouraging at first glance. 1. The Banker’s Ideal. Bankers look for an ideal loan applicant, who typically meets these requirements: * For an existing business, a cash flow sufficient to make the loan payments. * For a new business, an owner who has a track record of profitability owning and operating the same sort of business. * An owner with a sound, well thought-out business . * An owner with financial reserves and personal collateral sufficient to solve the unexpected problems and fluctuations that affect all businesses. Why does such a person need a loan, you ask? He or she probably doesn’t, which, of course, is the point. People who lend money are most comfortable with people so close to their ideal loan candidate that they don’t need to borrow. However, to stay in business themselves, banks and other lenders must lend the money deposited with them. To do this, they must lend to at least some people whose credit worthiness is less than perfect. 2. Measuring Up to the Banker’s Ideal Who are these ordinary mortals who slip through bankers’ fine screens of approval? And more to the point, how can you qualify as one of them? Your job is to show how your situation is similar to the banker’s ideal. A good bet is the person who has worked for, or preferably managed, a successful business in the same field as the proposed new business. For example, if you have profitably run a clothing store for an absentee owner for a year or two, a lender may believe you are ready to do it on your own. All you need is a good location, a sound business plan and a little capital. Further away from a lender’s ideal is the person who has sound experience managing one type of business, but proposes to start one in a different field. Let’s say you ran the most profitable hot dog stand in the Squaw Valley ski resort and now you want to market computer software in the Silicon Valley of California. In your favor is your experience running a successful business. On the negative side is the fact that computer software marketing has no relationship to hot dog selling. In this situation, you might be able to get a loan if you hire people who make up for your lack of experience. At the very least, you would need someone with a strong software marketing background, as well as a person with experience managing retail sales and service businesses. Naturally, both of those people are most desirable if they have many years of successful experience in the software marketing business, preferably in California. 3. Use the Banker’s Ideal It’s helpful to use the bankers’ model in your decision-making process. Use a skeptical attitude as a counterweight to your optimism to get a balanced view of your prospects. What is it that makes you think you will be one of the minority of small-business people who will succeed? If you don’t have some specific answers, you are in trouble. Most new businesses fail, and the large majority of survivors do not genuinely prosper. Many people start their own business because they can’t stand working for others. They don’t have a choice. They must either be boss or bum. They are more than willing to trade security for the chance to call the shots. They meet a good chunk of their goals when they leave their paycheck behind. This is fine as far as it goes, but typically, the more successful small-business people have other goals as well. Todd Gavin is a Valley-based independent financial consultant.

By HOWARD FINE Staff Reporter Fed up with L.A.’s taxes and bureaucracy, many San Fernando Valley business leaders say they are ready to support secession if they don’t see substantive changes in city government. “There is an urgency among business leaders and big employers in the Valley regarding the city’s attitude toward business,” said Ric Hill, a spokesman for 20th Century Insurance Co. in Woodland Hills. “There is a palpable sense of frustration among these business leaders that the city will often take a punitive and retaliatory approach toward business,” Hill said, adding that his company has not taken a stand on secession. “It’s very possible that this frustration with the city may push some businesses toward the secession camp.” The frustration is evident at Precision Dynamics Corp., a Pacoima maker of hospital identification wristbands that employs 350. Precision Dynamics President Walter Mosher said the city’s tax structure and lack of attention to business concerns has soured him on remaining in Los Angeles. “The business taxes here are outrageous. And the City Council runs its own fiefdoms; it doesn’t give a hoot about business,” Mosher said. “We need more accountability. I tell you, if charter reform doesn’t happen, we will look at secession. And if neither happens, we’ll be out of here and into a facility in Kansas that we obtained through a recent acquisition.” So far, most of the support for Valley cityhood or at least a formal study of the concept appears to be coming from small to mid-size companies based in the Valley. Meanwhile, Valley-based companies with broad, statewide constituencies like WellPoint Health Networks Inc. and Anheuser-Busch Inc. are declining comment on the issue. And the Valley Industry and Commerce Association, which represents many of the Valley’s major employers, has not taken a position on secession and is not expected to do so until feasibility studies are completed, said Bonny Herman, VICA’s president. But the United Chambers of Commerce of the San Fernando Valley, an umbrella organization of 23 chambers representing 9,000 businesses with a total of 300,000 employees, is supporting a petition drive that would require the Local Agency Formation Commission to conduct a feasibility study on Valley cityhood. “We’ve had 25 years of frustration with the leadership of Los Angeles not being responsive to the needs of the Valley. We’ve tried everything, and so far we haven’t gotten the change we need,” said Gary Thomas, president of the United Chambers of Commerce. Compared to VICA, Thomas’ group is more reflective of small business owners in the Valley. Thomas, however, said the United Chambers would defer taking a position on secession itself until the anticipated LAFCO study is completed. Attorney David Fleming, chairman of the Economic Alliance of the San Fernando Valley, sees momentum building for secession unless City Hall takes steps to improve the business climate in Los Angeles and to make government more responsive through the charter-reform process now under way. “Taxes and regulation relief are the two things that businesses are interested in. The city is losing the war in competition because the business tax is higher here than almost anyplace else,” Fleming said. “Major corporations call me and say, ‘We’re interested in doing business in Southern California and Los Angeles County. Look anywhere for us except the city of Los Angeles.’ They say that because of what they have to pay in business tax, because they have to go to all these different departments to get things done,” he said. Although he has not yet taken a position on secession, Fleming said the concept of a new, startup city could be very appealing to business. “In a new government in the San Fernando Valley, you can start fresh,” Fleming said. “You can set up a government much like Burbank or Glendale, that attracts business.” Mark Pash, owner of Van Nuys-based Pash & Bensen, a certified financial planning company with 60 percent of its clients based in the Valley, said he likes the idea of a government closer to home. “On the surface, it makes sense that those who represent the Valley should represent smaller constituencies than they do now. Government should be far more decentralized,” Pash said. However, Pash stressed that his stance is not cast in stone; he wants to see more numbers and economic data on what secession would mean for his business before making a final decision. Biomedical entrepreneur Alfred Mann, who runs two Sylmar companies MiniMed Inc. and Advanced Bionics Inc. said he has mixed feelings about secession. “As a business person, establishing another layer of bureaucracy, in my view, is not in the interest of business or the public. But, if the current system is dysfunctional, you must do something about it. Whether secession is the right way, or whether something like charter reform is the way to go, is the real question now,” Mann said. Some business people actively oppose secession. Mark Friedman, owner of Blue Cross Beauty Products in Pacoima, said he doesn’t believe Valley businesses would come out ahead if the Valley chose to secede. “Why secede and tamper with something that isn’t broken? I know this isn’t popular, but I’m very cautious about moving into uncharted territory like this. All sorts of promises will be made that, if the Valley secedes, your taxes will be lower. We simply don’t know that and we won’t know that until the secession actually takes place. I just don’t want to go through that,” Friedman said. Friedman generally had positive views of the city bureaucracy. “They (L.A. city officials) have always been there when I’ve needed something done. I have no complaints,” he said. For some businesses, like iMall Inc. in Studio City, executives are too busy running their companies to take a stand on the secession issue. “I’ve been so busy, running so fast with my business, that I really haven’t had time to follow the issue. I certainly haven’t had time to consider the issue either way. And the other business owners I’ve talked to also aren’t talking about this,” said Richard Rosenblatt, chairman of iMall, an online shopping service.

FINANCIAL ISSUES TO BE SPOTLIGHTED AT VICA BUSINESS FORECAST CONFERENCE AND ANNUAL MEETING, FRIDAY, NOVEMBER 14 by Laurie Golden George Vradenburg, III, senior vice president and general counsel of America Online, Inc., State Treasurer Matt Fong and Los Angeles Mayor Richard Riordan will be the keynote speakers at the Valley Industry and Commerce Association (VICA) Ninth Annual Business Forecast Conference and the 47th Annual Meeting and Luncheon on Friday, November 14th. At the VICA luncheon meeting, Mayor Riordan will give his “State of the Valley” address. George Vradenburg, III, who was named senior vice president and general counsel of America Online, Inc., and a member of the office of the chairman in March 1997, will be the keynote luncheon speaker. Mr. Vradenburg has extensive transactional, litigation and regulatory expertise in various sectors of the entertainment industry. He was at the vanguard of two broadcast networks, as senior vice president and general counsel at CBS, Inc., and executive vice president at Fox, Inc., during critical periods of the industry from 1980 to 1995, and is a frequent speaker on technical, trade and social issues of communications and entertainment. Mr. Vradenburg represented the motion picture industry in the December 1993 GATT negotiations in Geneva and has testified before congress on industry matters. He received his BA from Oberlin College and his JD from Harvard Law School. California State Treasurer Matt Fong will be the Keynote Breakfast Speaker for the conference. His discussion will focus on the economic health of the state and the prospectus for L.A. County. The breakfast meeting will then be followed by three industry workshops on Real Estate, Electric Deregulation and Entertainment Technology. Randy Hoffman, president of Magellan Systems Corp., will moderate the VICA panel on the Real Estate Forecast. Participants include John Cushman, III, president and CEO of Cushman Reality Corp.; Jerry Katell, president af Katell Properties; and Larry Kosmont, CRE principal of Kosmont & Associates. Daniel W. Douglass, an L.A. attorney who specializes in energy law issues and was formerly with Southern California Edison, will moderate the second workshop on the “Electric Deregulation Impact on Business.” Speakers include S. David Freeman, general manager of the L.A. Department of Water and Power, George Miner, director of Public Policy and director of Corporate Communications for Pacific Enterprises; and Barry Sedik, manager of Economic and Business Development at Southern California Edison. Ellen Fitzmaurice, co-chair of the VICA telecommunications and Technology Committee and founder- principal of MindWorx, will moderate the third workshop on Entertainment Technology. Workshop participants include Greg A. Granello, president and CEO of EDS Digital Studios, Inc., who will cover the topic of emerging technologies in post- production and digital- content entertainment; Paul Rioux, president of Universal Studios New Media Group who will discuss innovations in the interactive sector; and Mackenzie Waggaman, executive producer of MEDIALAB Studio L.A., who will be speaking on virtual technology and “motion capture animation.” The Grand Sponsor for the VICA Business Forecast Conference, Annual Meeting and Luncheon is the Los Angeles Times, Valley Edition. The co-sponsors are Imperial Bank, Kaiser Permanente, Magellan Systems Corp., and Time Warner Communications. Grant Thornton, LLP, is sponsoring the VICA Breakfast Meeting with State Treasurer Matt Fong; Lockheed Martin, the “Real Estate Forecast” panel; DWP, SCE and The Gas Company, the workshop on the “Electric Deregulation Impact on Business”; and Pacific Bell, the panel on “Entertainment Technology.” Robert J. Pearlman, a Client Service Partner and partner-in-charge of the Manufacturing and Distribution Industries Services Group in the Southern California offices of Grant Thornton LLP, is the Chairman of the VICA Business Forecast Conference. The event is scheduled to last from 7:30 a.m. to 2:00 p.m. at the Warner Center Marriott Hotel, 21850 Oxnard Street, Woodland Hills. Registration begins at 7:00 a.m. More than 600 civic and business leaders are expected to attend the event. The cost of the conference is $95 per person, and includes breakfast, lunch, parking, all event seminars and access to more than 50 VICA member exhibits. Luncheon only, $60: for reservations, call (818)888-2228/ Laurie Golden contributed this article on behalf of the Valley Industry and Commerce Association, a nonprofit and nonpartisan business advocacy organization founded in 1949. The mission of VICA is to encourage the economic vitality and growth of the greater San Fernando Valley region and to define, advocate and promote the agenda of the area’s business commnity.

By SARA FISHER Staff Reporter Pierce College in Woodland Hills is under attack by community groups for looking into selling or leasing part of its 240-acre farm for commercial activity. Much is at stake in the battle. The community faces the loss of one of its last large pieces of open space, while the financial viability of Pierce College may hinge on the fate of its farm. “After seeing our enrollment decline for the last 16 years, we need to change our basic educational delivery,” Pierce College President Bing Inocencio told the Los Angeles Community College District’s Board of Trustees last month. “I want to offer more educational opportunities in technology. Careers that involve technology show where our country is going, and our responsibility to the students is to reflect this.” But the school, which suffered a $4.8 million budget cut this year, is hard pressed to fund such courses, let alone pay existing operational costs. Consequently, the college’s Board of Trustees is eyeing the school’s most lucrative resource its land. Founded in 1947 as an agricultural school, Pierce College maintains a working farm that contains tillable and range land, as well as an orchard and herds of livestock. Currently, fewer than 300 students out of Pierce’s 15,000 full-time students take classes in the agricultural department. The campus as a whole encompasses 435 acres and is the largest community college in the district. Community outrage over the possible loss of the farm has been quick and fierce, considering that no action will be taken for over a year. The college confirmed that it will not make any decisions regarding the land until it finishes the Facilities Master Plan, which is projected to be completed in 15 months. In September, however, the board voted to re-examine the feasibility of developing the land as a means of raising funds for the school. The board orginally considered developing a golf course on the farmland in 1994, but shelved the idea. The current uproar was prompted in part by the Board of Trustees’ decision to lease a parcel of land adjacent to the campus to developers. Several bids have been submitted so far, including one from a fast-food chain. No closing date has been announced. Even though that piece of land is not part of the farm, some residents fear the decision signals that the board is more willing to open college land to development than it was three years ago. Upset about the loss of a working farm’s educational opportunities, a disruption to the habitats of migratory animals and of course the much-vaunted open space that adds property value to the surrounding neighborhoods, community groups have sprung to action, organizing protests, letter-writing campaigns and petition drives. “I recognize the terrible financial shortage facing Pierce, but there is a massive need for agricultural education,” Dorian Keyser, a representative of the Sierra Club, told the Board of Trustees during a public hearing last month. “Agriculture is California’s largest industry and we need to continue training and educating people for this industry.” Although those hoping to save the farm are highly vocal, some local residents, former college employees and current teachers favor any means of raising revenue to enhance the college’s quality of education. “We cannot afford to maintain the very expensive agricultural department any more,” local resident Steve Sheldon said at the meeting. “It is a frivolous waste of our taxpayer money. The land is worth tens of millions of dollars. Use that money where it is needed in the quality of the education.” L.A. City Councilwoman Laura Chick, whose district includes the college, had urged trustees to hold last month’s public meeting on the farmland’s future. Chick has not taken a position on development of the land, but City Hall approval would be needed for any rezoning to allow development.

Hd — Staying United On the surface, it’s hard to quibble with recently enacted legislation that no longer gives city councils veto power over secession petitions. Frankly, it’s a long time coming no city council has any business overriding the will of the people on such a fundamental matter. The problem with this particular legislation is its context. Now that Gov. Pete Wilson has signed it into law, the Valley secessionists are preparing their high-stakes battle to break away from the city of Los Angeles. It shapes up to be an expensive and lengthy process that, we hope and believe, ultimately will be voted down. The campaign, however, is certain to divide this already fractured city in deep and profound ways. Win or lose, the secession movement ushers in a troubled political environment one in which policymaking likely will be based not on sound judgment, but on whether you’re for or against secession. It’s not a great way to run a city. The most obvious and troubling subtext behind the Valley secession movement is a kind of acceptance almost a resignation that splitting away from L.A. is the only way to make local government responsive to the people. It’s a little like two people filing for divorce before seeking ways to work out their problems. In the case of Los Angeles, let there be no doubt that many problems exist. City Hall divisiveness was captured recently when council members Michael Feuer and Laura Chick called on City Councilman Mike Hernandez to step down. To us, it seemed like a well-reasoned plea but Hernandez and others on the council quickly denounced the comments as politically motivated, and worse. The name-calling that went on in council chambers was enough for even an anti-secessionist to wonder whether there might be a better way. There is, of course, and it starts with charter reform. The issues being raised by both charter-reform commissions should resonate to the Valley secession proponents, who don’t like the way City Hall does its business and feel they have little say in changing the agendas. As it turns out, they’re not alone. All over Los Angeles, there is a sense of frustration about local services, red tape and high taxes. Most of all, there is frustration over a city government that seems balkanized, impenetrable, and in some cases, just plain incompetent. Secession is not the answer a point that we suspect will become clear in the months to come as the Local Agency Formation Committee, or LAFCO, conducts an exhaustive study to determine, among other things, how public facilities like airports, sewer systems, reservoirs, harbors and parks can be split up. LAFCO can support secession only if it turns out to be fiscally neutral; that is, neither the Valley nor the city of L.A. must wind up getting short-changed as a result of the breakup. That’s a tall order. And don’t forget the effect of a breakup on property and business taxes. Let’s be clear: The system is broken and desperately needs fixing. But for such a large portion of L.A. to break away the Valley environs alone would become the nation’s sixth largest municipality would signal that the city, as a whole, cannot solve its problems. We’re not at that stage yet and let’s hope we never will be.

FINANCIAL PERSPECTIVE: A View of the National Credit Union Administration v. First National Bank and Trust Company by Virginia McGuire Traditional credit unions are based on a simple concept: a closely knit group of people pool their resources and provide loans to one another. During the Great Depression, when Congress passed the 1934 Federal Credit Union Act, the focus was on workers’ living paycheck-to-paycheck or churchgoers’ wanting to help others in their congregation or local community who were down on their luck. Membership was limited to people who knew each other through work or community because loan decisions were based on knowledge of the borrowers’ character, rather than their collateral. This “common bond” was the essence of credit unions, and it defined their niche in the financial system. This niche orientation is captured in the preamble to the Federal Credit Union Act, which states that credit unions are intended “to make more available to people of small means credit for provident purposes through a national system of cooperative credit, thereby helping to stabilize the credit structure of the United States.” Many credit unions still abide by this original spirit and have been successful in meeting the needs of “people of small means.” Credit unions undoubtedly are an important component of the financial services marketplace. But for a growing number of credit unions, the unique character that defines a traditional credit union has disappeared. Changes in regulatory policies have stretched the common bond concept beyond any meaning, enabling the conglomeration of hundreds or thousands of unrelated groups within a single credit union. The average credit union has more than 23 unrelated groups in its field of membership; some include more than 1,000. Along with the erosion of the common bond, there have been changes in credit union membership. Today’s typical credit union member is no longer one of “small means.” The credit union industry’s own surveys have found that credit union members are more likely to be those with higher incomes, more education, and full-time professional jobs than are non-members. The idea that credit unions serve people of small means who share a common bond has become, for many credit unions, more myth than reality. The role of credit unions would inspire less public policy debate if it were not for one thing: credit unions receive a tax exemption amounting to nearly $1 billion annually. According to the Office of Management and Budget, at current growth rates, this government subsidy could grow to $4.5 billion over the next five years. This lost tax revenue comes at the cost of individual taxpayers, including other tax-aying depository institutions against whom credit unions directly compete. Credit unions’ unique status does not derive from their cooperative structure. Other financial cooperatives that outgrew their special charters lost their tax-exempt status long ago: mutual insurance companies in 1942; and mutual savings banks (today chartered as cooperative banks in 24 states) and mutual savings and loans in 1951. The Effect of Regulatory Decisions and Defining Congressional Intent At the heart of this case is whether Congress ever intended credit unions to include members that did not share a single common bond. Two federal appeals courts have ruled that the 1934 Federal Credit Union Act is clear in its mandate that occupational credit unions like AT & T; must include only groups sharing a single common bond of employment (the same or a related employer). Congress reaffirmed this position in 1977 when it approved limited mergers of financially troubled credit unions at the request of the National Credit Union Administration (NCUA), saying in the legislative report that, “Nothing in this provision shall be interpreted as a means for the merger of credit unions with dissimilar common bonds.” Two years later, the Office of the General Counsel of NCUA completed an exhaustive study of the legislative history of the common bond, concluding that, “it is apparent that Congress never lost sight of this critical common bond factor throughout its long history in the Act and the Act’s many changes. Congress appears not to have intended that the central characteristic of credit union organization, i.e., the limited membership within a specified group of persons, be changed” [emphasis added]. And two years after that, at a 1981 hearing on the same subject, NCUA’s chairman told Congress, “We can’t combine credit unions with unlike fields of membership.” Yet, remarkably, the NCUA made a dramatic change to its definition of “common bond” in 1982, fundamentally altering the nature of credit unions. Rather than a single common bond’s defining a credit union, NCUA began to allow an unlimited number of groups with no relationship to the original sponsor–and no common bond among them–to join the same credit union. Today, 157,000 separate groups have been added to existing credit unions, resulting in such odd combinations as chicken processors and petrochemical workers; sausage makers and steam fitters; opera companies and bowling alleys; and ministers and exotic dancers who may belong to the same credit union. Some credit unions even go so far as to poke fun at the common bond concept, with the Credit Union National Association’s own credit union advertising that anyone taller than a cartoon monkey named Murray can join. The so-called “multiple common bond” policy, coupled with the expansion of credit unions into virtually every area of business available to banks, without a corresponding change in their tax-exempt status, is what spurred the American Bankers Association (ABA) and five small North Carolina banks to sue NCUA. [There is a companion case brought by ABA, the Independent Bankers Association of America, and America’s Community Bankers against NCUA, which is pending in the U.S. District Court for the District of Columbia.] Before the Supreme Court had even finished receiving briefs in this case, the credit union industry began to hedge its bets by asking Congress to support H.R. 1151, a bill that would in effect codify NCUA’s 1982 policy. While characterized by some supporters as a minor wording change, the bill would eliminate the single common bond requirement, encouraging the unchecked growth of credit union conglomerates, which would continue to receive the same special tax and regulatory treatment as traditional credit unions. Virginia McGuire is with the American Bankers Association.