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Can Anything Rise From The Ashes?


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CAN ANYTHING RISE FROM THE ASHES?

Like it or not, America this month got a good, hard look at the other Los Angeles--the city a world apart from the mansions of Beverly Hills and the movie studios of Hollywood. It's a place Ted Watkins Sr. knows well. From Watkins' L-shaped headquarters in South Central L.A., the Watts Labor Community Action Committee has been struggling since 1964 to bring housing, small businesses, and jobs to L.A.'s poorest ghettos.

But now, his office joins the sorry ranks of more than 5,200 shops, markets, and buildings reduced to charred hulks in the already blighted inner city. Nevertheless, with patrons that include some 50 trade unions and a cadre of city officials, the 68-year-old Watkins is determined to rebuild. "I'm not going to let this stop me," he says, surveying the rubble that once was his office.

REBIRTH? In the days that followed the unrest, politicians and business leaders moved quickly to announce a rebirth for L.A.'s pockmarked landscape. That was before reality set in. The price tag is bound to dwarf initial estimates of $1 billion in damages (table). Those costs could overwhelm the city government, not to mention the state of California. Both are facing huge budget deficits.

And if business was reluctant to invest in the other L.A. before, it's balking now. "The inner city has never been an easy thing to sell," says Jack Kyser, chief economist at the Economic Development Corp. of L.A. County. "And that was before the images of looting and arson were filling TV screens."

L.A.'s inner neighborhoods have been fading for years. In their heyday just after World War II, factories there provided jobs for workers who churned out airplane components, tires, and Buicks. But the Watts riots of 1965 set things back, and federal spending in the heady days of the Great Society couldn't turn things around. From 1975 to 1985, more than 75,000 jobs disappeared, says Melvin L. Oliver, sociology professor at the University of California at Los Angeles.

The economy's downturn only made things worse, especially in such fields as defense and energy--industries that have traditionally provided work for inner-city residents. Take Lockheed Corp. It was one of the few companies to open plants in the city after the Watts riots. But in 1989, it closed its factory after cutbacks in Pentagon spending. The toll: 500 jobs. And when Boise Cascade Corp. recently sold its plant in Torrance, not far from South Central, it eliminated jobs for 75 workers, who averaged 10 years in school and earned $12 an hour.

To make matters worse, the city population has swelled with the influx of immigrants. Citywide unemployment is at least 2% above the national average, and in South Central it runs as high as 50%. In 1991, a Social Services Dept. survey found that one out of every seven L.A. County residents receives some form of government assistance. That's 1.3 million people, and the aid costs the county more than $2 billion a year.

The chore for government officials, including former Major League Baseball Commissioner Peter V. Ueberroth, the newly appointed head of the city's redevelopment efforts, is to persuade companies to overlook the potential for more crime. "Businesses want a feeling of some comfort in those neighborhoods," says California Governor Pete Wilson, who recently met with executives from 15 of California's largest companies to encourage investment.

SMALL POTATOES. The response was underwhelming: Bank of America pledged $25 million in loans to help businesses rebuild. Other banks pledged less. J. C. Penney Co. will reconstruct its two outlets, as will Circuit City Stores Inc. And former Lakers star Magic Johnson is putting together a group of athletes and stars to invest in new businesses.

But the city needs nothing less than a massive infusion of aid to make a difference. President Bush is promising some $600 million in federal loans and other emergency support, but even that won't be enough. So far, Wilson has balked at approving the 0.25 sales-tax increase some Democrats proposed, which would have helped to make up the difference.

The city has no extra cash, either. The Los Angeles urban enterprise zone program, which provides tax breaks to companies that locate in the inner city, is limping along. And only two days before the riots, a city council committee voted to take $48.3 million earmarked for its Community Redevelopment Agency's low-income housing program to pay for added police and fire services. To make matters worse, more than $100 million in foreign investment, much of it from the Japanese, is also on hold.

Meanwhile, even at this early stage, Ueberroth is running into opposition. Some black leaders are grumbling that the man who pulled off the L.A. Summer Olympics in 1984 is a bad choice for the job, because he is white. And the local companies that he might have counted on for help are facing squeezes of their own: Unocal Corp., which recently announced $900 million in cutbacks, may not replace three gas stations damaged in the South Central violence. With those kinds of roadblocks, the other Los Angeles faces a long climb back--even to its former bleak reality.Ronald Grover, with Gloria Lau and Jane Birnbaum in Los Angeles and bureau reports


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