LOS ANGELES (CNS) - For the first time, local businesses would be given
preferential treatment when bidding for contracts with the city of Los Angeles
under a proposed ordinance unveiled today.
Mayor Antonio Villaraigosa said the so-called Local Preference Ordinance
would create about 10,000 jobs.
``Currently the city of Los Angeles spends approximately 84 percent of
its procurement dollars with businesses that are located outside of the city of
Los Angeles,' he said. ``Therefore, out of $1 billion allocated for
governmental contracts, only $180 million goes back to local businesses. This
represents a significant missed opportunity to stimulate the local economy.'
The ordinance would favor local businesses by sweetening their bids by 8
percent over those of outsiders. For example, when the city is deciding to
award a contract to the lowest bidder, it would deem a local firm's $1 million
bid to be $920,000.
Also, when the city is soliciting bids, local businesses' proposals
would be awarded extra points. For example, if a local business scored 100
points in the evaluation, the city would deem it to have scored 108 points.
To receive the ``local preference,' a business would have to lease or
own a building in Los Angeles County, and at least half of its full-time
employees would have to work in the county at least 60 percent of the time.
The company would also have to maintain a business tax registration
certificate for the prior six months.
Leron Gubler, president and chief executive of the Hollywood Chamber of
Commerce, said local businesses are currently at a disadvantage when competing
with outsiders.
``(The playing field) is not level because of the higher cost of doing
business in a city,' he said. ``You have a lot of businesses way out on the
fringes where the cost of real estate is a lot less, the cost of building taxes
is a lot less, and all those things factor into the cost of doing business. The
city's gross receipts tax here is much higher than in other areas.'
Sydney Chase, vice president of business development at Armorcast
Products Co., also spoke in favor of the measure.
``We're not focused on the right to prosper anymore; we are praying for
the blessing of surviving these difficult times,' she said. ``This local
preference will help make that happen.'
The mayor's office cited a study by USC professor Charles Swenson, who
found that a local preference policy would generate about 10,000 new jobs and
new revenue for the city.
``For too long, the city of Los Angeles has awarded contracts to private
companies without considering if any of those funds will filter back into the
local economy,' Councilman Bernard Parks said.
``This short-sighted practice of selecting the lowest qualified bid
without considering where the bidding company is located or where their
employees live is to the great detriment of the economic vitality of Los
Angeles,' he said.
Councilman Paul Krekorian agreed.
``Nearly a billion dollars of this city's taxpayers' money should not be
going to create jobs in Illinois, in Texas, in Florida, in New Mexico,' he
said. ``It should be going to create jobs and stimulate small business right
here at home in Los Angeles.'
The proposed ordinance would have to pass muster with City Council
committees, then by the full council, before making it to the mayor's desk for
his signature.