Rodney King Riot

 

 

 

 

 

Inner-city rebuilding dominated by supermarkets; two years after riot, smaller businesses not restored - Los Angeles, California - Real Estate

Los Angeles Business Journal,  April 25, 1994  by Bob Howard

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Almost two years to the day since hundreds of commercial buildings were damaged or destroyed in the Los Angeles riot, supermarkets are the main rebuilders of commercial properties in the areas most affected by the riot.

But according to preliminary figures in a new study by RLA, the organization attempting to rebuild riot-damaged areas and other "neglected areas" of L.A., the smaller property owners have made little headway in rebuilding.

Linda Griego, the former Los Angeles deputy mayor who became president and chief executive officer of RLA in February, said approximately 350 of the commercial sites damaged in the April 1992 rioting remain vacant. Most of those properties were formerly occupied by smaller businesses that have been either unable or unwilling to rebuild.

 


Griego said most of those 350 sites are in the parts of South Central and South Los Angeles that were hit hardest by the riot, but the 350 also include sites in many other surrounding communities that RLA defines as "neglected." These include parts of Hollywood, Long Beach, East Los Angeles, Pacoima and portions of the San Fernando Valley.

In the two years since the riot, supermarket chains Vons Cos. Inc., Ralphs Grocery Co. and Smart & Final Iris Co. have opened 10 new stores in the neglected areas. Those three chains, plus Food-4-Less, have announced plans to open another 20 stores, including eight that are scheduled to open this year.

Most of the (supermarket) commitments are still very much on line," Griego said. It's the businesses on the other end of the scale - the ones that formerly inhabited small commercial sites - that have not reinvested. Most of those sites remain vacant and fenced in.

Griego said the 350 sites that remain vacant were among 1,100 commercial sites damaged in the riots. About half of the 1,100 structures sustained relatively little damage, she said, and most of the sites with minor damage have been restored. She said the biggest challenge is to restore the 350 properties that were the most heavily damaged because those are the sites where the least amount of rebuilding has occurred and where owners are least capable of rebuilding on their own.

RLA is currently updating its survey of the owners of the damaged properties to find out if they are doing anything to rebuild or if there is some way RLA can help them rebuild.

"When you consider how many grocery stores have been built in two years, that's not so bad considering how difficult development is in today's economy. Most of the commitments for additional stores from supermarkets are still on line. But not very much has occurred on the 350 vacant sites," Griego said. "I'm concerned that they're just sitting there with no one working with the properly owners. I don't want these empty lots to be forgotten.

According to the new RLA president, some of the property owners have not rebuilt because they had insufficient insurance. Others already had heavy debt before their properties were destroyed, so they are not good candidates for SBA-backed loans or other traditional sources of financing for small commercial developments.

"The biggest problem for these small property owners, which is the biggest problem for everyone in today's economy, is getting financing," Griego said.

Some property owners also received sizable insurance claims settlements and have decided not to rebuild because their buildings had high vacancies before the April 1992 riot. Many of those owners are waiting for the market to improve before rebuilding, Griego added.

Griego said a recent RLA study, which was conducted for the agency by Cal State Los Angeles, surveyed owners of riot-affected properties to find out the status of their properties and what their plans are - if any. Survey results are still being compiled and are expected to be completed in May.

"We want to look at the survey results and see if we can come up with a strategy" to help the property owners, Griego said. For example, if RLA finds that a property owner needs $2 million to rebuild, and the SBA will only guarantee a loan on part of that amount, RLA would try to find a "combination of resources" for the rest of the financing.

The damaged properties include a variety of retail and some light industrial uses that are still in demand, even though the properties haven't been rebuilt, RLA officials said they believe.

"We know these communities need a whole bunch of amenities," Griego said. RLA is looking for these new service "amentities" - such as dry cleaning, restaurants, auto repair, etc. - to be provided primarily through the expansion of existing businesses that are currently providing such services within the areas served by RLA.

Griego even sees a need for new office buildings, despite the glut of such space throughout the Los Angeles Basin.

"There aren't surplus office buildings in this part of town (South Los Angeles). If some government agencies wanted to be closer to where their customers are, there are very few spaces where thy can go," the RLA president said.