How to choose a business bank Choosing a good business bank is an important step in the life of a growing company. A bank that is well-matched to a client can provide the best loan options, payroll services, fees and accessibility. By contrast, a bank that is ill-suited to your company can cost you time, paperwork and a significant amount of money. Knowing your needs One of the most important things to consider when choosing a business bank is the type of loans they offer. Even if all you are currently looking for is a commercial checking account, you eventually may need a loan. The right type of bank will be able to get you that loan as quickly and conveniently as possible. Will you need a Small Business Administration loan, a personal loan or a commercial loan? If you’re best qualified for an SBA loan, make sure to select a bank that offers this because other kinds of loans may be more difficult to get. It can be costly and time-consuming to switch banks. Consider the costs of the services you require. Direct and indirect fees can add up quickly. The fee-based structure a bank offers is particularly important. Extra and unnecessary fees can be detrimental to a start-up business, as can such things as maintaining the minimum balance of an account. One of the most important things is to find a bank with which you’re comfortable in dealing. As your business grows and changes, you’ll likely look to your bank to provide you with ever greater services. A bank that is already familiar with your company and its needs can get you these services and make your job easier. Finding a good match Choose a bank that is hospitable to your type of business. For larger companies, this may not be quite as big an issue. Banks often will woo them for their business. Small businesses often have to look harder to find the right bank. Some banks do not look at small businesses as warmly as others. After all, the small size of your business means a relatively small amount of capital to the bank, and the failure rate is high among small businesses. Researching a bank One good resource for someone looking for a business bank would be the Small Business and International Development Center, usually housed at a local chamber of commerce. There, small businesses can sit down and go through the qualifying aspects and identify what the best possible loan would be for a particular client. Banks are like any other service provider. Shopping for a bank is similar to shopping for a car: Go out and see where you can get the best deal. Call around to see what each bank has to offer, and choose the one that offers you the most practical services at the most affordable costs.

There are major hurdles ahead, but by the year 2000 San Fernando Valley voters may be asked to approve a measure that would create a new city in the Valley. Gov. Wilson’s signature on AB 62 took away the L.A. City Council’s power to block secession. Most Valley political and business leaders were agreed that the Valley should have the right to choose its own fate on secession. But now, many of those same leaders are on the fence when it comes to secession itself saying they must await the outcome of an expected feasibility study that would determine whether the new city could survive apart from Los Angeles. The Business Journal Forum asks: Do you think the Valley should secede from Los Angeles? Gwen Larson insurance agent Gwen Larson Insurance Agency Sylmar I’m basically for it. We’ve talked a lot to our Councilman, Richard Alarcon. I live in Sylmar and my business is in Sylmar. I feel like it’s a good thing and I think that we’re strong enough to secede. Octavio Nuiry president ON Marketing Northridge I think it’s shortsighted and it’s political. I don’t see what the purpose is. It’s the same thing with splitting up the school district I don’t get it. Creating a new government will only mean more governments, not a smaller government. Christopher C. Marella Design Quest Chatsworth Well, you know, I’m not too sure if there’s any special benefits (of secession). I don’t think there’s any need for it, L.A. hasn’t caused me any grief. Where’s the unity here, anyway? We’re the suburbs. Dr. Adrian Ortega general surgeon University of Southern California Sunland resident It’s probably a good thing because it gives a specific area more self control on how their tax base is spent. Getting less services and paying more taxes is a concern, but our taxes are high enough anyway and (the Valley’s) services are poor. Joann DeSantis secretary California State University Northridge Journalism Department I have very ambivalent feelings. In one way, I think it would benefit us to move toward a more local government, but in another way, creating another bureaucracy might be more expensive than we think. It’s also isolating Los Angeles proper. I think sometimes that it could be detrimental to both the (Valley and Los Angeles). Jeff Richardson director of production Trident Entertainment Inc. Burbank I moved to Burbank specifically to get away from Los Angeles. As far as the rest of the Valley wanting to get away, I wonder if they realize how much they’re going to be losing as far as services. But then again, they’re also big enough to go on their own.

By CHRIS DENINA Staff Reporter The San Fernando Valley apartment market is tightening, according to this month’s Valley Econowatch. There were 16,527 vacant apartment units in August, translating to a vacancy rate of 8.0 percent. That compares with a vacancy rate of 8.5 percent the previous month and 9.7 percent a year earlier. The steady improvement has been mainly due to businesses moving into and expanding in the Valley, said Maya Mouawad, manager of research services at Marcus & Millichap Real Estate Investment Brokerage Co. “Throughout 1997, businesses have been buying previously vacant land and buildings in the Valley,” Mouawad said, pointing to several large employers that have signed leases for space being developed at the former GM assembly plant in Van Nuys. “When you have businesses like that moving into the area, it will bring employment,” she said. And employment means workers are moving into the area, many of whom are renters of apartments. Among the factors contributing to the improvement of the Valley apartment market, Mouawad said, are general population increases, a lack of newly built apartments, and the marketing campaigns that are promoting the Valley as a good place for businesses. “Little by little, the Valley is recovering from the earthquake and recession,” Mauawad said. “Given its location and proximity to L.A. County, it has the character of a residential community, which brings apartment vacancies down.” And that is making Valley apartment buildings more attractive to investors. “The apartment buildings are more attractive because there’s less risk for delinquencies,” she said. “What’s happening in the Valley is a reflection of the overall economy. It’s reflecting that this is a good time to invest. “If all things remain constant, it (the Valley apartment vacancy rate) will probably stabilize below 9 percent.” The Valley’s industrial-market data support Mouawad’s contention that jobs are expanding. The Valley’s industrial vacancy rate as of the end of the third quarter stood at 5.1 percent, down from 6.1 percent in the second quarter and 7.1 percent a year ago. All four of the Valley’s industrial submarkets have improved over the past year, with the East Valley improving the most. Its industrial vacancy rate is 3.1 percent, down from 5.3 percent a year ago.

By RONALD SHINKMAN Contributing Reporter As chief executive officer and chairman of Woodland Hills-based WellPoint Health Networks Inc., Leonard D. Schaeffer heads one of the San Fernando Valley’s most prominent companies. Among the largest publicly traded health plans in the nation, WellPoint which operates as Blue Cross of California within the state and as UNICARE in out-of-state regions has more than 6 million members and projected 1997 revenues of more than $6 billion. Before joining Blue Cross in 1986, Schaeffer was chief executive of Group Health Inc., a Minneapolis-based HMO. During the Carter administration he was administrator of the Health Care Finance Administration, which operates both the Medicare and Medicaid programs. Question: You are one of the very few high-ranking health care executives who has held a similar position in government. What from that experience have you brought over to the private sector? Answer: Both sides of that equation have very strong prejudices against the other. People in business are said to think people in government aren’t very focused or disciplined. The people in government are said to think business people are focused on bottom-line issues, only care about profits, and don’t care about quality. My experience is that both of those attitudes are extremely exaggerated and are really not consistent with the facts. In health care, people are drawn to this company WellPoint is the for-profit, Blue Cross is the not-for-profit because they are concerned that people have access to good health care. They’re concerned with helping people. So I don’t think it’s true that everyone (in business) is money-grubbing. There are also quality people in government. But I think in today’s world, health care is going to be more impacted by the business sector than it is in government. In the old days, government had a tremendous amount of money and was developing new products. But for whatever reason, Americans have said on both the state and federal level they no longer want government to manage the health care system. I was there for the end of the good old days, when government was constantly generating new programs. I felt I was in the part of the economy where the major decisions were being made. That has shifted to the private sector, and that’s one of the reasons I’m here. Most young Americans don’t think Medicare will be there for them. So they’re depending on the private sector, on things like 401(k)s, things like IRAs. We want to be there for them. Q: There’s been a lot of criticism of high executive salaries in the health care industry, yours included. What is your view on that? A: I think it’s very hard to get compensation right. We are in a very unusual position. We converted from a not-for-profit company, but were originally prohibited from using stock-based compensation for our employees by the Department of Corporations, and we had to use cash-based compensation. Once that issue was resolved, we got out of cash-based compensation, because it is not good for the bottom line and does not align your interests with those of the stockholders. In that process, we had one year with a big lump, and it was construed as, “These guys were being paid a lot of money.” But this isn’t a place where there’s a founder with a lot of stock. It’s all current compensation for current performance. Q: What’s your take on the HMO tax negotations with the city of Los Angeles? A: This whole process is baffling. We started over a year ago, hoping to resolve this thing. Not just our company, but all of the HMOs. There is almost no movement in the negotiations even though we have been discussing it for a year now. But (L.A. Councilwoman) Laura Chick has been very supportive and the mayor has been very supportive. There was a report that came out about the city tax structure, and it concluded that taxes were very high and there’s this kind of patchwork, crazy quilt. It’s not a very easy-to-understand system. There is a very high tax rate that was not designed for managed care companies; I don’t even think those types of companies existed when it was put into effect. We would certainly like to have this resolved. I think Laura Chick understands (the HMOs) are an enormous asset for the city. In the last three or four years we have been growing continually, as have many of the other HMOs. We have brought jobs and tax revenues to the Woodland Hills area and Los Angeles, but for whatever reason, they have not been able to come up with a proposal that makes sense. Q: So you’re not happy with the current proposal from the city? A: Frankly, I don’t even know what the current proposal is. It goes back and forth and back and forth, but it never goes forward. Q: Why do you think so many HMOs have congregated in the Woodland Hills area? Is it because of the access to Calabasas, Westlake Village and the other western suburbs preferred by executives as places to live? A: We’ve always been here. In terms of WellPoint and Blue Cross, this building and the 32 acres surrounding us were developed by Blue Cross 16 years ago when there was no one else here. I wasn’t involved in the decision because I wasn’t here yet (Schaeffer joined the company in 1986). I can’t tell you anything else, other than it’s a very nice place to be, and we like it. I don’t know why the other (HMO headquarters) ended up here. Q: In recent years you have acquired health plans with operations outside California. How will the rest of your expansion plans be fulfilled? A: What we’re trying to do is expand in a focused way, as opposed to being all things for all people. We have five geographic locations that we picked where we think we can expand and be successful Texas, Georgia, the Mid-Atlantic States, the Midwest, the Tri-state area of New York, Pennsylvania and New Jersey those locations were chosen because of the legislative/regulatory environment, the provider environment because they’re interested in managed care, and the employer environment. Take Mass Mutual and John Hancock together, and fully half of their members are located in these geographic areas. We will continue to acquire businesses that will enhance our market share in these areas. We’re not buying HMOs. HMOs are very expensive. We’re buying books of business that are primarily non-managed care, where the owner of the company wants to go to managed care but does not have the time or the capital to do it. We’re focusing on that because the acquisition cost is much lower. Aetna spent $3,700 a member when they bought U.S. Healthcare (an HMO); we spent $87 a member when we bought John Hancock (an indemnity insurer). We’re focusing on these (indemnity insurers) because we’re one of the few organizations to be able to switch members successfully from indemnity to managed care. That’s what we think is a basic skill of ours. This (strategy) has an appeal to Wall Street and investors because of its focus. If we get Wall Street to value that member we bought at $87 for an amount that’s even half the $3,700 Aetna paid, then we’ve created value. We’ll create value for our stockholders, we’ll create value for the people paying the bill because the cost of treatments will go down, and most importantly, we’ll create value for our members because they will have more choice. It does take a long time to move them over; it doesn’t happen overnight. People find their way to products comfortable for them. We’re able to track utilization where employees actually go, then project what their costs will be if they go into slightly more managed care products. We don’t tell people what’s good for them; we offer choice. This is critical for us. Our whole corporate philosophy is based on the notion of reinventing the health care system so that people feel comfortable and have some control over the health care services that are rendered when they need them.

Knocking on Death’s Door Already well known for teaching students how to keep things alive in its agricultural department, Pierce College in Woodland Hills is now turning its attention to the other end of the life cycle. President Bing Inocencio has proposed that the community college offer a degree in mortuary science. “There is certainly steady employment in this field,” Inocencio said. “People forget that mortuary work is an honorable, well-paid occupation.” The mortuary science degree is one of 16 new career programs that Inocencio proposed to better prepare students for entry into the workforce. Not surprisingly, the mortuary science degree is getting a strong reaction. “I’ve had businessmen ask me incredulously about this degree,” Inocencio said. “I explain that as a college president, it is my job to spot opportunities for my students. Mortuary science is simply one of them.” Giving a Dam Los Angeles has been having a heck of a time convincing the National Football League team owners to let our city have a professional football team. But maybe we’re going about it all wrong, just asking for one team. Why not push for two? “If we had two football stadiums in a region with 10 million people, I think we could have that,” said L.A. City Councilman Richard Alarcon, who represents a section of the Northeast Valley. “And the San Fernando Valley wasn’t even considered, even though I have 600 acres of land available to do that.” The land Alarcon envisions as a stadium site is at Hansen Dam. Never to Return Anyone awaiting Johnny Carson’s return to beautiful downtown Burbank should give up the ghost, says Carson’s long-time sidekick Ed McMahon. McMahon told the Business Journal that Johnny will never return to the small screen again, for any reason, period. Carson, who lives in Point Dume, spends his time travelling, relaxing and going to tennis matches. “You’re not going to see Johnny unless it’s on old TV (re-runs),” said McMahon. “Johnny did it and it’s over.” Not so for McMahon, who is co-starring with Tom Arnold in the WB network’s new show “Tom.” Cable Dancing There are cable TV channels devoted to just about every topic under the sun weather, cartoons, food, you name it. Now, Universal City-based freelance writer and dance enthusiast Rae Wilder is trying to establish the All Dance Cable Channel. One problem. “I don’t know how to make a cable channel,” concedes Wilder, who is seeking all manner of expertise and funds to realize her dream. The idea for the channel came at a recent dance seminar where she realized that most people scarcely see the world’s spectrum of dance. So far, she said, there have been pledges for elbow grease in the project, but no financial contributions. “All the dancers I meet are enthusiastic, but they can’t provide financing,” she said. Sweet Roles Next time Jerry Seinfeld wants to stuff his face with junk food, don’t be surprised if he reaches for a Twinkie. Interstate Brands Corp., the parent of Hostess Cakes, has retained Norm Marshall & Associates of Sun Valley to get its products featured in movies and television programs. Other Hostess products destined for Hollywood are Ding Dongs, Ho Ho’s and Suzy Q’s. Junk food may be the scourge of dietitians, but it has always been popular with TV and film producers, says Teri Ward, senior account director at Norm Marshall. “They are easily recognized and easily incorporated into a scene,” Ward said. “But we keep our eyes open. We don’t want people referring to the product negatively or to see anything irreverent done with it.” A Starr is Born Business leaders throughout the country have been bemoaning the lack of qualified job applicants for some time. And that’s certainly the case at World Modeling Talent Agency in Sherman Oaks. Located in a dingy, yellowing office on Van Nuys Boulevard between a yoga studio and an insurance agency, World Modeling supplies the local adult film industry with about 70 percent of its performers. While producers often find themselves turning away would-be porno starlets, reliable male talent is apparently hard to find. On a recent afternoon, a male actor named “Paul Starr” dropped by to try and help rectify that shortage. The clean-cut, 35-year-old University of Wisconsin graduate says he has done two sex scenes so far, earning $400 each time for about two hours of work. “I won’t be able to run for Senate,” admits Starr. But the bread-and-butter issues appear to overwhelm any future political aspirations. “I get to do this and get paid for it? What a country,” Starr says.

By JEANETTE DeSANTIS Contributing Reporter Long known as a bedroom community full of new tract homes and growing families, Simi Valley is aiming to attract more businesses to the mix. Simi Valley city officials admit it is a delicate balancing act to bring major league businesses into a family-oriented community, but one that is necessary to keep residents from driving and shopping elsewhere. “We want businesses to come here and we think when they do, their employees will want to stay here,” said Don Penman, Simi Valley’s assistant city manager. “We think it is a real asset if our residents don’t have to commute over to the (San Fernando) Valley or any place else.” Simi Valley currently has about 20,000 professional/managerial jobs, according to Mayor Gregory Stratton, out of a total workforce of more than 100,000. Stratton said the city is looking to double the number of professional/managerial jobs by the year 2020. One company expected to provide Simi Valley residents with more job opportunities closer to home is Countrywide Home Loans, the city’s largest employer. It currently employs 200 people in Simi Valley, and is looking to double the size of its workforce by late next year. “The city has always supported us and even helped us look for a new site when we decided to expand,” said Patrick Benton, senior vice president of administration at Countrywide. “But they still keep the community’s needs in mind. They don’t want any building too obtrusive.” While the city has not indicated it would alter current guidelines to facilitate Countrywide’s expansion, city officials have “communicated with us proactively, telling us about the community’s concerns and what has met resistence in the past,” Benton said. Other businesses growing in Simi include Micom Communications Corp., a telecommunications firm which plans to build a 135,000-square-foot research and development facility, and Dreamquest Images, a special effects company owned by the Walt Disney Co. that is searching for leased space to double its workforce. “Job creation is key to continuing expansion and the city knows this,” said Dennis L. Barbee, president of the Simi Valley Chamber of Commerce board of directors. Mayor Stratton said the city’s key to business attraction and retention is its incentive program, which ranges from providing assistance with permit costs or business licenses to helping expedite the planning process. “That is what initially gets them here,” Stratton said. Not all employers in Simi Valley are large-scale, high-paying operations. Low-cost housing and a business-friendly city government were the main factors that originally enticed Jack Spotts to open his startup business, Jack’s Shoes, in Simi Valley back in 1974. That makes Jack’s Shoes one of Simi Valley’s oldest businesses. Spotts said Simi Valley was ideal for those looking for a balance between family and business. “There were seven of us and a dog,” Spotts said of his young family. “We needed a five-bedroom house with a big yard. I was looking in Los Angeles and couldn’t find anything, and someone told me about Simi just over the hills.” Upon leaving Kinney Shoe Corp. and opening up his own shoe store in Simi Valley, Spotts initially sold only men’s and boys’ shoes to a city of 50,000. Now Spotts sells all types of shoes for families, and Simi’s population has more than doubled to over 100,000. “We grew with the community, starting small and adding to the store and adding more merchandise several times over,” said Spotts, who originally worked alone but now employs 40 people. The 39-square-mile city itself is fairly young. It was incorporated in October 1969 and like much of Southern California, saw a boom in population in the 1980s. But that growth has leveled off in the 1990s. From its base of 56,000 in 1970, Simi Valley’s population had mushroomed to 100,000 by 1990. But by 1996, it had only crept up to 105,000. Yet commercial growth is evident. Two new speculative office projects have recently been approved, one a 184,000-square-foot structure at the Tapo Canyon Business Park and the other a 132,000-square-foot building off Royal Avenue. On the west end of the city, a 305,000-square-foot shopping center is currently under construction and will be anchored by a Walmart and a Home Depot. The center, located near Madera Street and the Ronald Reagan (118) Freeway, is scheduled to open in late 1998. There are also new housing developments going up in Simi Valley. The first model homes of the Long Canyon housing tract near Wood Ranch are expected to be complete by next month. The rest of the 670 houses should be completed next year. “Our goal is to have balance,” said Assistant City Manager Penman. “We want to provide employment for our residents but not at the cost of the environment.” The need for retailers to appeal to families is key to success in Simi Valley, said Todd Archambault, assistant manager of the Trader Joe’s specialty grocery store that recently opened in Simi Valley. Although the store has been open for less than two months, Archambault said he has already noticed the heavy family influence in Simi Valley. “In Santa Barbara, we would see a lot of elderly people and college kids, but in Simi we see lots of families,” he said. But even with the city’s growth, Simi Valley still has a relatively high office vacancy rate. About 20 percent of the total inventory of 423,627 square feet of office space in Simi Valley is vacant, according to CB Commercial Real Estate Group Inc. The city’s industrial market is considerably tighter. Of the 7 million square feet of industrial space, there is an 8.4 percent vacancy rate, said Bob Kahn, a CB Commercial vice president. Of the 10 industrial buildings still available, more than half are being actively courted by prospective tenants, he added. City officials point out that Simi Valley’s government is on solid financial ground with a general fund budget of $36 million. (The city sets its budget to match its revenues, and it maintains a general fund reserve of several million dollars, Penman said.) One revenue source the city is looking to bolster is the sales tax, which is projected to bring $8.8 million to city coffers during the fiscal year ending June 30, 1998. “Obviously we would like to have greater sales tax revenue ours is not as high as Thousand Oaks but we are fiscally sound and are working hard to build it up,” Penman said. One unique attribute setting Simi Valley apart from other Southern California cities is its designation as one of the safest cities in America with a population over 100,000, according to FBI crime statistics. “What we have here is a quality of life,” Stratton said. “That is one of the things businesses are looking for. We get a lot of businesses moving out of Los Angeles because of the unsafe atmosphere there.” And that is what Simi Valley touts as its best overall benefit that it isn’t Los Angeles. “Simi is one of those places that has its own identity,” Spotts said. “We have that small-town flavor where you know everyone in town. If I was in the Los Angeles market, I don’t think that would be the case.”

FINANCIAL PERSPECTIVE: INCENTIVE STOCK OPTIONS LOSE WITH NEW TAX LAW! By Alan Ungar For anybody who has Incentive Stock Options, the law of unintended consequences certainly reared its ugly head when Congress lowered the Capital Gains rate to 20% from 28%. The problem is that anybody who exercises ISO’s and holds on to them for 18 months still pays 28% instead of 20% capital gains. Ken’s case illustrates the problem. He works for a high tech firm and some time ago was granted options on 16,000 shares at 37 cents. His goal is to diversify his portfolio so that his total wealth is not with one company. He wants to do it in the most cash efficient and tax efficient way he can. Table 1 illustrates his problem. Description Old Law New Law Amount of Tax Preference $354,080 $354,080 Alternative minimum tax at 28% 99,142 99,142 Capital Gains Tax Due at Time of Sale 99,142 70,816 Tax Offset (Max Minimum Tax Credit Allowed) 99,142 70,816 Tax “Overpaid” $ 0 $ 28,324 In English, at the time you exercise a stock option it is subject to an Alternative Minimum Tax of 28% on the difference between the exercise price and the market price at the time of exercise. Under old law, that total amount was fully credited. Under new law, the full amount of AMT is not credited, so Ken pays at 28%, not 20%. Should he sell the stock immediately and pay the higher ordinary income tax? From a tax standpoint the answer is definitely no. On the other hand, he has to finance the AMT and he wants very much not to be so vulnerable by holding just one stock. The answer would be a no-brainer if he paid 20% capital gains instead of 28%. But, he should not be faced with this dillema in the first place. The problem needs to be fixed! And it can be! The solution is easy! The problem has surfaced because there is a flaw on IRS form 8801 and because the AMT rate is 28% instead of 20%. To fix it, the IRS has to change its instructions on line 2 of form 8801 so that a negative number on line 9 of the prior year is picked up—or in the Technical Corrections act, the rate of AMT is changed to 20% from 28%. Getting the powers that be to make this fix is not so easy. When we talked to the Ways and Means committee the answer was,”that is a forms problem you need to call the IRS.” NOT! This is an American problem! ISO’s have contributed immensely to our productivity. This incentive needs to be encouraged not discouraged! After peeling ourselves off the wall and restoring our equanimity, we asked “So who do we call at the IRS?” “Don’t ask me,” said the bureaucrat!” Gag us with a spoon! So we decided not to ask him. Instead we called Brad Sherman, our congressman and Brad’s people got on it right away. However, more pressure needs to be applied,the old “the squeaky wheel gets the grease” maxim holds. You can help by contacting your congressman or writing to Chairman of the Ways and Means Committee, Bill Archer, 1236 LHOB Washington D.C. 20515,or Fax him at 202 225 4381. Just ask him to make the changes talked about above. There is a deeper question. Why should ISO’s be subject to the Alternative Minimum Tax? What happens if the stock price goes down after exercise? Taxes for anticipated profits have been paid in advance and those profits are not forthcoming. Why should tax payers have to finance their AMT create “opportunity” losses because the taxes are paid with money that could have been invested? ISO’s should not be subject to Alternative Minimum Tax,and you can help get this changed too! Just call or write those same congressmen and tell them what you think. Your actions will very definitely make a difference. In the meantime, be careful about exercising those stock options! Alan B. Ungar is President of Financial Counsel, a fee-based Financial Planning and Investment Management firm in Calabasas. He is Co-Chair of VICA’s Federal Issues committee and is the Valley chair for the Concord Coalition.

By HILDY MEDINA Staff Reporter Despite growing political clout in the San Fernando Valley, Latino leaders are sitting on the sidelines when it comes to Valley secession a stance that could hinder creation of a new Valley city if and when the measure qualifies for the ballot. Supporters of Valley cityhood say they have invited Latino leaders to be part of the process. But some members of the Valley’s Latino community fear the secession movement could erase years of political gains made in the city of Los Angeles. “If it turns out that the (Latino) voting population here isn’t quite as large as our voting population citywide, then we may not be able to get the proper representation,” said Xavier Flores, president of the San Fernando Valley Mexican American Political Association. “If we secede and end up with less Latino representation than in the city of Los Angeles, then what kind of benefit would that be?” Flores is far from alone. None of the top leaders of Latino political or community organizations in the Valley have endorsed secession, and while few openly oppose it, there is a widespread complaint that Latinos are being left out of a movement dominated by white voters in the West Valley. “In my opinion, it (secession) has always been a West Valley-dominated movement,” said state Assemblyman Tony Cardenas, D-Sylmar. “I’ve talked to some of these people and I’ve never gotten any strong feelings of a true sincerity of total inclusion.” City Councilman Richard Alarcon, however, said Valley Latinos as well as other minority leaders are simply awaiting more information on the feasibility of secession. “A lot of people say that the vanguards of the movement are often not the ultimate kings,” Alarcon said. “At some point, the minority population of the San Fernando Valley will get engaged in this.” But Alarcon acknowledged that minority group members “have not been in the leadership because they are concerned.” “The history of the secession movement had been one that some people perceived to be one-sided, ethnically,” he said. “At some point they (will get) involved in making the decision, I believe they’ll all go one way or the other,” Alarcon said. “And that is going to hinge on to what extent they feel they will be in a position of control.” Jeff Brain, co-chairman of Valley Voters Organized Toward Empowerment (known as Valley VOTE), seems perplexed by the complaints. Since the 12-member volunteer board was formed about 18 months ago, it has called on Flores and other Latino leaders for their input, he said. “We believe we’ve kept the Latino leaders informed. We invited them to all our meetings and asked them to name people to talk to us,” said Brain. His group also sent out newsletters to Latino leaders to keep them apprised of what has been going on, he added. Further, now that the Legislature has removed the L.A. City Council’s right to veto secession, Latino representatives will be recruited for the Valley VOTE coalition board. Currently made up of representatives of a dozen homeowner and business groups, the board will be expanded to 25 members to be more representative of the population of the Valley, Brain said. Valley VOTE currently has one Latino member, Carlos Ferrerya, who also is chair of Councilman Michael Feuer’s Livable Neighborhood Council in North Van Nuys. But many of the people Brain plans to solicit as board members say they can’t support a campaign they know little about. Before Latino activists will join the coalition, they want to have their questions answered, said Flores and others. Will they pay higher taxes and receive less services? Will they be better off under the city of L.A.’s thumb? “People have come to us (to ask for our involvement), and we’ve said, ‘Absolutely not, we still don’t have enough information,'” said Flores. “Let’s err on the side of caution.” Irene Tovar, director of the Latin American Civic Association, agreed, saying she doesn’t want to take part in a movement that could lead to secession when she doesn’t yet know whether it would benefit the Latino community. Tovar, like Flores, remains skeptical about secession. Her biggest concerns are economic and environmental. She fears that a city of the San Fernando Valley would be dominated by business concerns, and the rights of Latinos would not be as well protected as they are under the city of Los Angeles. “Some of the (secession leaders) are business people. For the most part I respect the need for their point of view, but many look at the Northeast Valley as having nothing more than a work force and cheap land,” explained Tovar. “What will the environmental impact be if companies keep coming in? Are we going to be the junkyard of the Valley?” If she had to vote on the secession today, without any tax issues addressed, “I would vote against it,” Tovar said. Brain concedes that many issues of concern to the Latino community have not been addressed, but that’s because the secession movement has barely started. His organization’s primary focus has been on lobbying the state Legislature to support the “right to secede” bill. “All we did was change the law,” Brain said. “Now is the opportunity to stop and take a breath and go to the next phase.” The next phase, in which a broad-based coalition to forge a cityhood campaign would be created, is the tougher half of the secession battle, say some observers. “People long for a united Valley. Well, the Valley is not as unified as people think,” said Cardenas, who is reserving judgment on secession until he gets “more real information. I’m waiting for the meat and potatoes for the secession to be taken seriously.”

By JASON BOOTH Staff Reporter In the four months since Great Western Financial Corp. was bought by Washington Mutual, 387 employees at Great Western’s Chatsworth headquarters campus have been handed pink slips. But Great Western’s new bosses are insisting that they are moving cautiously with respect to future cuts, seeking to avoid the kind of rapid staff cutting that occurred following Wells Fargo & Co.’s acquisition of First Interstate a year earlier. While the first 220 jobs cut in July and August were all among Great Western’s senior-level executives, the latest 167 cuts were spread across nearly all levels of the company, said Great Western spokesman Tim McGarry. Hardest hit last month was the data-processing department, from which 22 positions were cut. Despite the cuts, Washington Mutual says it intends to retain the Great Western nameplate in California and Florida and could eventually expand the franchise by merging it with American Savings, which Washington Mutual purchased in December 1996. With regard to the ongoing job cuts, McGarry said: “It’s being decided on the ground, with each business manager making recommendations on the cuts. The primary reason is duplication of services due to the merger.” Analysts and officials with Washinton Mutual agree that the bank is making efforts to ingratiate itself with Great Western employees, even those about to lose their jobs. “Washington Mutual is going out of its way to communicate as well as it can with Great Western employees. They don’t want to make the same mistakes Wells Fargo did with First Interstate,” said Charlotte Chamberlain, banking analyst at Jefferies & Co. Heavy-handed layoffs by Wells not only prompted other First Interstate employees to jump ship, it compelled thousands of account holders to shift their business to other banks, analysts say. Washington Mutual does not want to replicate that scenario. “They are coming in here and doing these things very carefully. The feeling is that doing it right is more important than doing it rapidly,” McGarry said. To soften the pain of job losses, employees receiving pink slips are getting severance packages granting them their regular pay for six months to 18 months after separation. If there has been a complaint by employees, it is that the downsizing is going too slowly, creating a companywide sense of uncertainty. “It’s not an easy experience for people here, especially for those who don’t know their fate,” McGarry said. He said the hard-fought battle between Washington Mutual and H.F. Ahmanson & Co. over acquiring Great Western is partially to blame. “Because the takeover fight was so intensive, they (Washington Mutual) couldn’t make too many plans,” he said. As part of a damage-control campaign, Washington Mutual’s Chairman and Chief Executive Kerry Killinger has been touring Great Western facilities to meet and speak with employees. Washington Mutual has said it might close as many as 100 branches of Great Western and American Savings out of a total of 416. The closures will be made among branches of the two franchises that are within close proximity of each other, McGarry said. An announcement on closures will be made early this month, while a clearer picture of the long-term staffing situation at the Valley headquarters campus should be available by the end of the year, he said. While conceding that the total number of positions eliminated through the closures will probably exceed the job cuts seen so far, McGarry stressed that staff attrition should minimize the need for layoffs by the time they are carried out next year. With all those newly vacant offices at Great Western’s sprawling 15-building campus in Northridge and Chatsworth, questions are being raised about the future of the facility. The 10-story tower that dominates the local skyline still bears the Great Western nameplate and there are no plans to remove it any time soon, McGarry said. He did not rule out the possibility, however, that other tenants might lease part of the headquarters campus property in the months to come. And with the bulk of the job cuts hitting senior staff, most of vacancies are in the tower’s executive offices. Any tenant renting such premier space may well want its name on the tower. Real estate agents say Great Western is still in the process of evaluating how much property it will eventually put on the market. There is also the possibility that the layoffs will in time be offset by new hires in other functional areas due to improved business performance. According to Washington Mutual, Great Western has seen a net increase of 25,000 accounts since it began offering free checking at the start of October. Analysts concur with the numbers. “Washington Mutual is excellent at marketing. They have done well in generating new accounts in Washington and I’m sure they will do well in Los Angeles,” said Joe Morford at Alex. Brown & Associates in San Francisco.

By HILDY MEDINA Staff Reporter The San Fernando Valley’s largest privately held companies are a diverse lot, ranging from an electrical equipment wholesaler and a managed care provider to a plastics manufacturer and a car dealership. Showing explosive growth from last year was Westlake Village-based Consolidated Electrical Distributors, a wholesaler and distributor of electrical equipment that jumped from No. 3 on last year’s List to No. 1. The company took in an estimated $1.6 billion in revenues during its fiscal 1996, according to the List, up from $640 million in revenues in fiscal 1995. Bumped from the No. 1 spot was chemical and plastics manufacturer PMC Inc., which is now No. 3. Revenues were flat at PMC last year, when it posted $780 million in sales the same as 1995. The oldest company of the bunch, 104-year-old citrus growing co-operative Sunkist Growers Inc., is No. 2 on the List, with more than $1 billion in revenues. Headquartered in Sherman Oaks, Sunkist reflects Los Angeles’ long agricultural history. L.A. County at one time was one of the largest citrus-producing regions in the country. While Sunkist is the only food-related company on this year’s List, nearly a quarter of the top 25 largest private companies are wholesalers, including two in the top 10 Consolidated Electrical Distribution and travel-wholesaler Pleasant Travel Service Inc., which is No. 8 on the List with $320 million. Another major industry grouping is construction. Two of the top 10 companies on the List are construction firms No. 5 Tutor-Saliba Corp. (a contractor on the Metropolitan Transportation Authority’s subway project) with $571 million in revenues and Calabasas-based Environmental Industries, a major landscape and irrigation construction firm. Environmental Industries is No. 9 on the List with $300 million in revenues, up from $265 million in 1995. The number of cars being sold in the Valley is a reflection of the region’s improving economy. Two of the List’s top 25 private companies are auto dealerships, and both reported strong sales growth in 1996 over 1995. North Hills-based Galpin Motors Inc. ranked at No. 6, rising from $433 million in 1995 to $501 million in 1996. Toyota of North Hollywood ranks No. 17, pulling in $98 million compared to $80.5 million in 1995. Conspicuously absent from this year’s List are media and entertainment companies, which make up one of the Valley’s most important industries. Of the list’s 25 private companies only one, Woodland Hills-based Tower Media Inc., No. 12 on the List, is media-related. Tower Media publishes the Daily News of Los Angeles. Motion picture and television production companies are notoriously reluctant to share revenue information, because such details can affect negotiations on future contracts. Although some Valley-based production companies probably deserve a space on the List, it is impossible to determine their annual revenues.