The city of Los Angeles is systematically flawed, and it will be up to business owners and community advocates to save the city from itself, Caruso Affiliated founder and CEO Rick Caruso told the Miracle Mile Chamber of Commerce last week.
During the chamber’s monthly meeting last Thursday at the El Rey Theatre, Caruso outlined how the Miracle Mile has managed to thrive in spite of the self-imposed hurdles at city hall.
“We have a city that’s going to have a new mayor and half a new council,” he said. “As great as that new mayor may be and as great as those new council members may be, we have a broken system. …No matter how hard they try structurally to get anything changed in the city to move it forward, chances are it will not happen.”
That is, unless businesses become proactive, he said. Caruso credited the success of the Miracle Mile to business owners in the area, where The Grove, LACMA and other entities have thrived. He referenced the proposed Academy Museum of Motion Pictures at LACMA, as well as LACMA’s planned expansion, and used those projects as examples to show the Miracle Mile’s vitality.
“It really is the cultural center of Los Angeles,” Caruso added. “It’s the 24-hour nucleus of this city. You made that happen. …Politicians have probably only gotten in the way.”
He said the city’s new $7.7 billion budget will not work, as city officials are already debating whether to support parks or police.
“I don’t think that’s the right debate,” Caruso said. “The debate should be, how do we reel in our expenses? How do we reel in our pension fund?”
Approximately 96 percent of the LAPD’s budget is payroll, with 4 percent allocated for equipment and policing, he said.
Businesses can make a difference in rectifying the city’s structural problems through various means, such as enticing tourists, Caruso said. He noted that 41 million people visited Los Angeles last year, equating to billions of dollars in revenue to the city.
“That’s what we need more of,” Caruso added.
He mentioned Caruso Affiliated’s 8500 Burton, a luxury apartment building at La Cienega Boulevard and Burton Way. Caruso said his company worked with the community to get the project approved without an environmental impact report — unlike other developers whose projects have not been built in the area.
“We changed more rules with that piece of property than we changed at The Grove,” he said. “But we did it with full transparency to the community and full support. And we’re up and running.”
Caruso said that project shows the power that businesses and communities have in transforming the city.
“And we need to do more of it,” he added.
The CEO also referenced Third Street, which he said was once dying but has now “exploded.” He said he’s been lobbying the city council to have the trolley at The Grove linked to the Beverly Center. The Fairfax Trolley once thrived in the area and was beloved by residents, but it was shut down in the 1990s.
Caruso said shoppers could park at The Grove and take the trolley down Third Street to shop and eat. He said he’s been asked why he would link the two shopping centers.
“Eventually, people are going to shop at The Grove,” Caruso said. “Even if they go down and have lunch on Third Street at Toast, they’re still going to come back to The Grove. I’ve got their car. Wouldn’t that be a fun thing down Third Street? Why not do that?”
Further, the trolley could be expanded to link to LACMA, he said.
“That’s the kind of things we should be doing, because it makes the city vibrant,” Caruso said. “It makes it interesting. It makes it more livable. It makes it more fun.”
In that regard, San Francisco and Seattle are “kicking our butts,” he said. Additionally, Caruso said he met recently with New York Mayor Michael Bloomberg, who told him, “I’m taking the entertainment industry. Over with. Game over. You guys are losing the race.”
“And he’s right,” Caruso said, adding that residents must demand from city hall what is best for their local communities.
He used The Grove as an example of how the Miracle Mile could draw more business. Caruso said the shopping center’s sales were $2,000 per foot, which was considerably higher than the $400 average. Additionally, Pacific 14 Theatres at The Grove topped the U.S. in sales, Caruso said.
“We’re in a commodity business,” he added. “That movie theatre — same Raisinets, same movies, same popcorn. Why do we have more people go to that theatre in North America than any other theatre? It’s the experience.”
Caruso said The Grove was designed to accommodate those who simply want to hang out and read the newspaper. Eventually, people who visit The Grove to enjoy the atmosphere will shop there, he said.
“That’s what I hope for with our neighborhood,” Caruso said, adding that he wants to be a part of the dialogue. “Life is short, so your experience should be grand.”
The Caruso Affiliated founder also fielded questions during the event. One asked his opinion on the biggest problem facing Los Angeles’ economy.
His answer was simple: “pension, pension, pension.” Caruso said the city already has too many overpaid staffers, yet city officials are discussing giving raises to some employees.
“You wouldn’t do this with your business,” he said, adding that businesses can work with local governments to add more jobs. “Creating jobs is simple. Let’s encourage businesses to be here. Let’s encourage businesses to stay open.”
Caruso mentioned LegalZoom, which moved its headquarters from Hollywood to Glendale a few years ago. He said the city threatened to tax the business as a “regular” business — as opposed to an Internet business — so the company moved its 1,300 employees near Caruso’s The Americana at Brand.
“Now, we get their business every day at the Americana,” Caruso said. “The city gets zero.”
When asked if there were any plans to expand The Grove, he said, “We’re maxed out at The Grove.” However, the shopping center recently received a $5 million upgrade to its lobby.
“You don’t make a dime off the lobby, but it’s a great experience,” Caruso said.
He also discussed his decision not to run for mayor. Caruso said he was excited to run, the campaign team was in place and the announcement date was set, but he opted not to do so after speaking with his four children, whose ages range from 13 to 23.
“I thought to myself, ‘I get one chance to grow up with these kids. The mayor’s race comes along every four years,’” he said. “In hindsight, it was the right thing for the family and for me and for the business. Hopefully, down the road, we’ll be able to do it, if it makes sense to do it.”
When asked if he had any upcoming projects in the Miracle Mile, Caruso said he didn’t, but “we would love to have a project in the Miracle Mile.” Chamber president Steve Kramer suggested he look at Wilshire Boulevard and La Jolla Avenue, and Wilshire Boulevard and Crescent Heights Boulevard — two shovel-ready sites. Caruso said he did have a project that is “on the very front end” in Hollywood.
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