South Gate Mayor Henry C. Gonzalez is far more blunt. "That kind of money, for 30 or 40 jobs, is crazy."
Eshaghian disputes the idea that the 74 jobs he has promised would cost more than $46,000 each in public funds. He envisions that the company, which had been seeking a new location, will eventually employ as many as 200 people, and he argues that he's taking a bad property off the CRA's hands after the agency bought it at the top of the real estate bubble.
According to Eshaghian, the South Los Angeles parcel, which cost the CRA $2.7 million at the height of the market, is now worth only $1.1 million "maximum" and, he says, cleaning up the toxins left by Goodyear is "going to cost $400,000 to $600,000."
But, as Commissioner Janis points out, that cleanup is being paid for by the CRA's $750,000 forgivable loan — not by Eshaghian. And Alejandro Ortiz, a commissioner who voted for the deal, nevertheless dispute's Eshaghian's estimate of the South Los Angeles land's value, saying the most recent appraisal was $2.4 million, not $1.1 million.
"It is not an ideal deal," Ortiz concedes. But, he says, the scheme is the best way to rid the CRA of the land on 59th Street, which was purchased with the idea of creating an incubator for local businesses — a CRA plan that collapsed when the economy tanked.
"How do we get out of this without too much pain?" Ortiz asks. "What I really don't want is for us to own an empty building for 10 years."
Dena Belzer, president of the Berkeley-based consulting firm Strategic Economics, says there is some justification for the redevelopment agency's approach.
Looking at the "straight ratio" between the public funds spent on the move and the number of jobs created can "potentially underestimate the total benefit," she says. "The best way to think about it may be not to think of it in terms of subsidy-per-job but how it fits in a larger strategy."
But Alec Levenson, of USC's Marshall Center for Effective Organizations, says that cities can much more effectively create new jobs in neglected areas not by using subsidies but by doing the obvious: improving a neglected area's infrastructure and services so businesses want to move in.
"Subsidizing developments directly is almost always a losing proposition from a taxpayer's perspective," Levenson says. "These huge net transfers to businesses out of taxpayer monies [result in] about the same distribution of jobs that you would have otherwise." Nearby cities end up competing against each other in a shell game — a game that "companies and developers have learned how to play a long time ago," he says.
As for whether the initial 30 jobs relocating to L.A. amount to "job creation," Levenson asks, "Is it really less than four miles? To me, that's giving a really nice subsidy for someone who was already employed locally."