Government incentives long have been a primary tool on every level — city, state and national.
President Trump's emphasis on trade deals is all about incentives and disincentives. I'll open my borders to your products if you open your borders to mine — an incentive. Tariffs on imported products — disincentive. You get the idea.
Being in Movietown USA, we've heard a lot over the years of incentives to movie companies to keep production in Southern California. And I don't think there has been an auto dealership open in Long Beach (or Signal Hill or Cerritos, for that matter) that didn't get some sort of sales tax break to locate here.
Remember the Redevelopment Agency? The whole concept was based on providing incentives to business owners to locate, not just in the city, but in parts of the city deemed requiring special help to get going again.
Tuesday night, the Long Beach City Council debated two more types of incentives, both critical, dealing with totally different issues.
First, a group of council members said they want to be proactive in keeping Molina Healthcare in Long Beach. Molina Healthcare is the only Fortune 500 company Long Beach can call its own, and is one of the city's top employers.
But there are storm clouds on the horizon. The company moved some 400 employees from Long Beach to San Pedro earlier this year. Then there was the palace coup ousting brothers J. Mario and John Molina from day-to-day management as CEO and CFO, respectively. It hurt the city even more because the Molinas were philanthropists on a grand scale.
You don't boot the sons of the founder without raising alarms of more changes to come. So the council decided Tuesday to create a business retention team, often called a Red Team, to explore what it will take to solidify Molina Healthcare's presence in Long Beach.
You can bet there will be incentives involved. There were incentives when the city lobbied to keep the C-17 airplane manufacturing plant operating (and it worked for an extra year or so). Further back in the mist, the city used Red Teams to try to convince airlines to stop at Long Beach Municipal Airport. Yes, there was a time when the city publicly went after more flights. And, after a couple of spectacular failures by independent startups, the Red Team incentives brought JetBlue to town.
The other incentive program the council talked about Tuesday had a far different goal. These incentives are designed to help the homeless and near homeless find places to live.
At issue is reluctance by owners of apartment buildings to accept Housing Choice Vouchers, commonly called Section 8 vouchers. This is the program where the government pays part of the rent (there is a similar program specifically for military veterans).
There are plenty of vouchers; so many that a good portion aren't used because the holder can't find anyplace to rent. Council members, aware that Long Beach faces a severe affordable housing crisis (vacancies are almost nonexistent), asked management to come up with incentives to coax landlords to open their doors to Section 8 tenants.
City Manager Pat West and his crew tried to match offerings with the biggest complaints heard from landlords. One proposal would coordinate city-required and federal-required property inspections, cutting red tape. A more traditional incentive uses the famous Measure H county money for the homeless to offer one month's rent to landlords to hold units while potential renters are referred and screened. The city also could create a Damage Mitigation Fund that would protect property owners above and beyond security deposits (landlords say Section 8 tenants are more likely to trash apartments). And the city could start offering move-in assistance, including paying that security deposit and utility hook-up fees.
The one proposed incentive West and his staff balked at was waiving permit fees and inspection costs to convince apartment owners to take rental assistance vouchers. According to the staff, the current annual fee is $57.50 per unit. While waiving that fee would make little difference to the owner's bottom line, it could cost the city the revenue it takes to support three full-time positions, likely inspectors, a year. That would cause inspection delays — a disincentive.
Incentive programs only work if the cost is worth the gain, and that can only be judged after the fact. Hard to say what the Red Team might offer, but so far it looks like incentives could accomplish what the City Council wants.