Your eyes on California Government

DEC. 26, 2011

By WAYNE LUSVARDI

Like Disneyland, Hollywood and Silicon Valley, the Tournament of Roses Parade is a symbol of California’s sun-blessed creativity. It crests with the crowning of the Rose Queen and her Royal Court, a bit of monarchism even die-hard democracy lovers won’t object to.

Countless Americans back East, watching TV as it snowed outside, have envied parade participants and spectators clothed in shorts and floppies.  The Easterners then started working to make their California Dream come true by moving here.

But it isn’t coming up roses for this year’s Rose Parade, as it’s commonly called, which will roll this year on Jan. 2, 2012

One reason is the element of politics that has crept into the celebrations. The Occupy movement plans to march behind the parade with the “crazies” as the 44^th “human float.”

And who knows what else could happen. In 1992, then-Pasadena mayor Rick Cole rode in the parade wearing a T-shirt stamped with the slogan, “Tournament of Racists.” That year, a direct descendant of Christopher Columbus was appointed grand marshal of the parade during the 500^th aniversary of the voyage to America of the Admiral of the Ocean Seas. Cole branded the descendant a reminder of European America’s heritage of “greed, slavery, rape and genocide.”

Which hasn’t prevented Cole from taking lucrative government jobs paid for by the taxpayer-descentants of those he attacked. He’s currently city manager of Ventura, where he has been promoting “smart growth” — a policy that raises home prices and suppresses home ownership by blacks, Latinos and others he claims to be helping with his politically correct positions. His total 2010 taxable compensation is $191,940. And what a pension that will bring.

Fortunately, the  local branch of the Tea Party — known as the Pasadena Patriots — has decided to back off its earlier decision to also appear at the end of the parade.  Tea Party spokesman Michael Alexander said, “We have decided to not be a part of this piece of drama and exercise in street theater.  Pasadena is entitled to one day without politics.”

Aside from political protests, there are deeper economic reasons why it’s raining on the routes the Rose Parade will wind through in Pasadena.

Corporate Parade Sponsors

The Rose Parade has been officially renamed, “The Rose Parade by Honda.” And the Rose Bowl Game is now named, “The Rose Bowl by Visio.” These corporations have banned the city of Pasadena and the media from using the old names without the corporate identities.

Banks and big corporations mainly make the Pasadena Rose Parade possible today.  Nineteen floats will be sponsored by corporations: American Honda, Bayer Advanced, California Clock Company, China Airlines, Dick Van Patten’s Natural Balance Pet Foods, Discover Card, Dole, Farmers Insurance, HGTV, Macy’s, Microsoft Kinect for XBOX 360, Paramount Pictures, NAMCO Bandai Games America, Paramount Pictures, RFD-TV, Trader Joe’s, Kaiser Permanente, U.S. Bank and Wells Fargo Bank.

Other nonprofit and service organizations with floats include: AIDS Healthcare Foundation, City of Hope, Donate Life, Girl Scouts of Greater Los Angeles, Kiwanis International, Odd Fellows and Rebekahs, Rotary International, Shriners Hospitals for Children and three schools and religious organizations. Plus two floats for each of the teams playing in the Rose Bowl football game the same day, the Wisconsin Badgers and the Oregon Ducks.

Interestingly, the Ministry of Tourism and Creative Economies of the Republic of Indonesia is sponsoring a float.  But the local Chamber of Commerce, the San Gabriel Valley Economic Partnership, the Los Angeles County Economic Development Corporation and other local pro-business organizations do not have floats.  It’s telling that a float touting capitalism is now sponsored by Asia, not the United States or California.

Many of the local cities that entered floats in past parades have dropped out due to financial pressures.  Absent will be a float from the small city of Duarte that teamed with the City of Hope cancer treatment center for decades.  The City of Hope will continue a solo entry for 2012.

The neighboring cities of Alhambra, Burbank and Glendale all pulled out, but private donations rescued them.  West Covina won’t make it, however.  Even wealthy Beverly Hills has dropped out.

Surprisingly, the Anheuser-Busch brewery, which had entered a team of famous Clydesdales horses for 58 years, decided to spend its money elsewhere.

Behind the Corporate Façade — Non-Profit Parasites

Years ago, current Pasadena Mayor Bill Bogaard, a Democrat, pressured the parade sponsoring organization — the Pasadena Tournament of Roses — to accept non-profit agency members on their governing board.  He also forced a sort of coup of the governing board of the local Chamber of Commerce.  So today unions and non-profits, not corporations or small businesses, actually control the Chamber.

The image of the corporation-dominated Rose Parade and Rose Bowl may be what is conveyed to the public through the mass media. But behind the facade, Pasadena is a postmodern, anti-corporation community controlled by unions and with 1,000 non-profit agencies. That’s one nonprofit for every 54 households in Pasadena.

Nobody addresses the hole that nonprofits create in municipal budgets. The Occupy movement has urged bank customers to withdraw their funds and put them in nonprofit credit unions. But Pasadena has so many nonprofits that they are an invisible drain on the community that defies their glorification by the Occupiers.

Local conservative activist Mary Dee Romney wrote in an email, “There is growing acceptance by well-heeled folks in the Pasadena area that their income-producing endeavors are of such essential ‘virtue’ as to be entitled to non-profit status, thereby exempt from taxation.”

Romney provided an example. She said, “On Sept. 9, 2009, a Pasadena Star News editorial revealed that ‘insiders’ from the Thoroughbred Racing Association of California would bid for the Santa Anita Race Track (303-acres in nearby Arcadia) and run it as a ‘nonprofit arm of the Thoroughbred Owners of California’.”

The Chairman of TRAC, Arnold Zetcher, said, “We’re putting together a ‘not-for-profit,” which doesn’t mean we don’t want to make a profit — we do. We take the money and put it into the purse structure.”

Romney concluded, “Who in the Pasadena area needs a Swiss bank account when they can avoid taxes through phony non-profits? The very same folks who hide their income from taxes through non-profits are the first to call for taxes on the rest of us.”

Auto Dealers Crash Along the Rose Parade Route

Today, “the Little Old Lady from Pasadena,” who became the “terror of Colorado Boulevard” in the old Jan & Dean song, wouldn’t be buying her Super Stock Dodge in Pasadena. It doesn’t have any Dodge dealers.

There is probably no greater marker in Pasadena of the economic downturn than the closure of nearly all the major new auto dealers along Colorado Boulevard, the route of the Rose Parade.

John Martin, a boutique auto broker in Pasadena, explained why the dealerships died.  It wasn’t only because of the real estate meltdown or bank fraud.  Martin said, “Pasadena auto dealers set up shop on Colorado Boulevard in the 20s, 30s, 40s, 50s and 60s. The unfortunate fact is hundreds of thousands drive down the 210 Freeway since it was built in 1970. Out of site out of mind.

“Dealerships expanded to many communities in the 70’s. Alhambra has four strong markets to draw from North, South, East and West. Pasadena loses.

“Thinning of the herd is important. Land Rover strategically places dealerships 50 to 60 miles apart. Chevy, Ford, GM and Chrysler have dealers 10 to 15 miles apart.

“With the saturation, dealers pull folks from all over,” Martin said. “And many times it is the last contact with the client after the sale or lease. Not to say that a salesman at the dealership does not have a repeat clientele. But many salespeople do move from place to place. The Rusnak luxury auto dealerships of the world do compete with a location on Colorado Boulevard. But they are specialty cars: Porsche, Bentley and so forth.

“Your dealers in Glendora are on the freeway route.  All of the old U.S. Route 66 new car dealers made the jump 30 to 35 years ago. A good example is Person Ford in the city of La Verne.  The city subsidized the dealership for 15 years with free loans not to move from Foothill Boulevard, which is two miles from the freeway.  Person closed four years ago. Out of site from the masses on the freeway.

“There are no guarantees of success for a dealer with a spot on the freeway, but the odds are better. Good service backed by good management, with helpful sales staff, is part of the equation. Auto brokers are relationship-built organizations. Many consumers are afraid of the dealership process. Thus there is a niche for the boutique auto broker.”

Fools Gold

Also contributing to the decline of auto sales and dealerships in Pasadena that Martin speaks about is the construction of the Gold Line light-rail project.  The Gold Line runs down the median of the 210-Foothill freeway that cuts through Pasadena.

It is being extended to the easterly portion of the San Gabriel Valley, heavily subsidized with $700 million in federal transportation funds championed by Rep. Adam Schiff, D-Pasadena. Local politicians brag that the Gold Line created 6,900 jobs.  They don’t calculate how many jobs it unintentionally wiped out.

The Gold Line is a highly inefficient and costly form of public transportation. Its main economic benefit is the many transit-oriented housing projects created along the light-rail route.  The Gold Line is just another form of mixed-use redevelopment with inclusionary housing masquerading as a public-transit project.  But after the real-estate bubble burst,  California has overdosed on luxury housing located on expensive commercial land, built at the expense of business creation.

The real-estate bubble may have masked the economic downturn in Pasadena for a couple of decades. But when the bubble popped, the auto dealerships that remained located along old Route 66 abruptly died because they weren’t by the freeway.  The regional and municipal land planners had failed to rezone enough large land tracts along the new freeways for new auto dealerships. In some cases, redevelopment actually relocated dealerships away from the freeway; those dealerships predictably died.  Those communities that relocated auto dealers along the freeways captured customers away from nearby cities such as Pasadena.

But will the extension of the Gold Line light rail wipe out their gains in order to create transit-oriented retail and affordable housing?

In-N-Out University

One of the few unheralded bright spots in the local economy is the In-N-Out Burger chain.  In-N-Out hires many young people out of high school.  It also has a management training program called “In-N-Out University,” which it has run since 1984 in Baldwin Park, where the chain was started.

In contrast with In-N-Out’s success is Mama’s Small Business Kitchen Incubator.  Mama’s is a nonprofit funded with a $2.6 million grant and a land loan by the city of Pasadena.  Mama’s cost $9,000 a week to operate.  Its extensive marketing campaigns brag about allowing more than 100 people to “rent” its kitchens to make food to load onto “roach coaches.” Many of these mobile restaurants compete with local, for-profit restaurants that are already hurting for business.  Despite the hype, government-sponsored restaurant incubators are a costly failure.

Green Paint from Red Arizona

If one read the local newspapers in Pasadena, one would get the impression that only government created new jobs or job training.  An example of a private program that doesn’t get any media attention is Dunn-Edwards Paint Company’s jobs and training program.

Dunn-Edwards Paint is jointly owned by the Edwards family and its employees.  It has been in business since 1925.  The company has about 100 retail outlets.  Professional architects, homebuilders and property managers account for about 90 percent of its sales.

In July 2011, Dunn-Edwards announced it was building the “world’s first” LEED-certified paint manufacturing facility. LEED stands for Leadership in Energy and Environmental Design.

But the 336,000 square feet facility was being built in Arizona, not California.  The obvious market for “green” paints and coatings is California.

The city of Pasadena provides financial incentives for LEED certification on all new buildings.

Pasadena may have been able to assemble land to accommodate the Dunn-Edwards new paint production facility. It could have used the former site of Stuart Pharmaceuticals, previously owned by Johnson and Johnson. Instead, that freeway-adjacent site was downzoned for transit-oriented housing and historic preservation.

Pasadena Wilts Roses

The coincidental theme of the Occupy the Rose Parade Movement is: “It’s Not Coming Up Roses.”

Pasadena is a fitting location for its demonstration. Not only is Pasadena the location of the corporation-sponsored Rose Parade. It was also the epicenter of the Mortgage Money Bubble.  Pasadena headquartered Fannie Mae, IndyMac Bank and Countrywide Savings.  Even Pasadena’s mayor is a former banker who helped merge Security Pacific National Bank and the Bank of America.

Pasadena is a wealthy city that had about $666 million in reserves, investments and cash in 2008.  But it is not immune to economic stagnation.  Pasadena recently rolled $74 million of its public pension obligations into a 20-year bond to be financed with pension obligation bonds that will double the cost of paying for pensions.  Paying for public pensions with bonds will double their cost to the taxpayers and suck more money out of the community that could have been used for business development.

Pasadena is also running a $20 million deficit in its $160 million renovation of the Rose Bowl, financed with federal Build America Bonds.

But the Occupy Movement will have to look beyond its anti-corporatist ideology if it is going to have anything more than symbolic political influence on the economy.

Local Problems

Most of the economic problems of Pasadena are local, not global.

Pasadena over-zoned and overbuilt transit-oriented mixed-use developments and inclusionary housing on pricey commercial land next to freeways.  Such freeway-close developments gobbled up sites that could have been used to relocate auto dealerships from obsolescent locations along the old historic Route 66.  They also crowded out any chance of new facilities for contrived green industries being built in the suburbs.  Such facilities are now being built out of state.

Over the last few decades, Pasadena grew non-profit agencies instead of small businesses.

Its attempt to “incubate” start-up restaurants is not only a failure and redundant but mostly politically motivated.  Private businesses starved for start-up financing after the collapse of the Mortgage Money Bubble.  Many restaurants closed or have struggled to stay open.  But government and local churches have collaborated to fund a “restaurant business incubator” project that only serves to put other restaurants out of business.  Those who cannot afford up-front capital needed to start restaurants should not be in that business.

But not according to local politically correct local government and churches that want to transfer money from the 1 percent to the so-called 99 percent no matter the result.

Pasadena’s, and California’s, economic stagnation has little to do with Wall Street.  It has more to do with an anti-business culture.

An overwhelming percentage of voters still believes that pro-growth policies for the economy are better than reducing inequality. That doesn’t mean restaurant business incubators, luxury affordable housing, or counterproductive redevelopment and public transit projects.

As you watch the pictures of whatever demonstration marches at the Rose Parade on New Year’s Day in Pasadena, be aware that things are not what they are portrayed to be.

It’s not coming up Roses in Pasadena because Pasadenans no longer want to grow roses.

Tags: Chrysler, Dodge, Dunn-Edwards Paint, Glendora, Pasadena, Rose Parade, Rose Queen, Tournament of Roses, Wayne Lusvardi