Rick Caruso

"Los Angeles: A New Kind of Leadership" Los Angeles Town Hall

May 12,2011

Thank you for that very kind introduction. And thank you for inviting me here today.

I've been thinking for some time what I should talk about here at Town Hall. I wondered what remarks would be worthy of such a distinguished group of guests.

I first solicited advice from my 11-year-old daughter Gianna. When I asked her what she thought you might like to hear from me, she shrugged and said "not much."

So then I sought the counsel of my wife of 25 years, Tina. And after careful consideration she said to me, "Rick, whatever you do don't try to sound intellectual, witty or charming. Just be yourself."

So let me start with a story. More than a century ago, a wild-eyed dreamer by the name of "Lucky" Baldwin came to Southern California to speculate in land. He bought some large parcels across the region, which he divided and sold off to people in the East.

When some complained that $200 an acre for unimproved land was too much, Lucky replied: "Hell, we're giving away the land. We're selling the climate,"

Men and women like him believed in Los Angeles. They were visionaries who saw here the opportunity to build something new; that the social and economic rules of the old cities of the East didn't apply. In many ways, the founding of Los Angeles was a rebirth of the American dream. We were a city of endless opportunity.

I believe that's still true today. Los Angeles has a special grip on our collective imagination. From the aspiring actor to the immigrant; from the entrepreneur to the student; people still find their way to Los Angeles to realize their dreams.

But we are also a city of nearly four million people and six area codes; a patchwork quilt of 500 square miles, spanning the rolling hills of Porter Ranch to the docks at the Port of Los Angeles. And as we've grown, so have the challenges of ensuring Los Angeles remains a vibrant and livable city.

I'm speaking out on these issues, because what's happening to Los Angeles is painful to me. I love this city. I was born here, I went to school here, I've built my business here and I'm raising my family here.

And I'm frustrated that our current political class often seems to be incapable of even recognizing the scope of the city's challenges - let alone addressing them. They look instead to the next election, the next fundraiser, the next ribbon-cutting or - in some cases - for tickets to the next sporting event.

Compare that to other cities in Los Angeles County which have collectively added nearly 500,000 new jobs since 1990.

The problems we're facing will only grow in complexity and magnitude, if we don't get it right today. If we're going to create new jobs; or better schools; or a more livable city, we need a new kind of leadership for a changing Los Angeles.

We need decisive leadership, which brings people together to achieve meaningful change. We don't need political lifers, who've held on to their government paychecks by glorifying process over results.

We need disruptive leadership, that's unafraid of risk when it comes to making our city a better place. We don't need accommodationists, who have an interest in preserving the status quo.

And we need demanding leadership, which reflects the seriousness of our city's problems, and which operates with deep purpose and at a high tempo.

This is the time for strong, confident and creative leaders with vision; leaders who are bold and positive, and who can set a new tone and a new direction for the City. It also calls for compassionate leaders, who understand that our social safety net has become dangerously fragile. And I believe all this will only come from men and women who know how City Hall works -- but who haven't been part of the problem.

That's because City Hall is a roadblock that's keeping Los Angeles from reaching its potential.

There are some good people in City Hall doing really good things, but unfortunately they are the exception rather than the rule.

The unemployment rate in Los Angeles is an embarrassing thirteen and a half percent -and some actually claim the city is finally getting it right, because it's down from an unconscionable fourteen percent.

Talk about the "audacity of hope]"

I don't buy it. With all due respect, I'd say our job creation efforts in have been an abject failure. Who here thinks that Los Angeles is a "business-friendly" city?

One statistic alone can show you why change is so badly needed. Since 1980, the City of Los Angeles has added one million people to its population. In that same period it

has not added ONE net new job. In fact, it has lost 50,000 jobs. '

When it comes to jobs, the cities around L.A. are eating our lunch.

In some cases, if an employer is fed up with the City's taxes and regulations, they can

Let me share with you two recent experiences that we've had.

literally cross the street to another city that gives them what they need. Businesses vote with their moving vans, and the message they're sending couldn't be clearer.

A healthy, welcoming business environment is essential to the future of this city. The revenue businesses create help provide critical services to all the people of Los Angeles; that social safety net. That's why retaining, expanding and attracting jobs must be a clear and urgent priority.

We need to reduce -- and eventually phase out -- the city's gross receipts tax, which is regressive, anti-business, and has become an efficient job-killing machine. Imagine a tax that skims money off the top before a business ever makes a profit. Skimming off the top is what the mob used to do in Vegas, and has no place in L.A.

But taxes are only half of the problem. We also need to streamline the planning, development and permitting processes.

First, we're building a new luxury apartment building at the corner of Burton Way and La Cienega. It's one of the few things in Los Angeles right now that's actually getting built, and it's creating jobs too. But we needed to relocate a transformer, and two city departments fought over how and where it would go. The simply couldn't work it out. We actually had to get a councilman to introduce a motion to make it happen. That's not efficient government.

The second example is at LAX. We were asked to consider putting in a bid to help design and lease the interior of the new Tom Bradley International Terminal, as well as some other terminals. We were excited about it, put together a world-class team, and spent nearly one million dollars on design work and planning. And then we sat, because the RFP never came out. Month after month of delays. Then the airport began to carve out big chunks of the plan, all for the wrong reasons, to the point where it was simply no longer a viable project for us to pursue:

By the time this contract is awarded, they will be a full year behind schedule. This is a contract that is worth millions to the city, would support lots of new jobs, and it's a full year behind. Who is accountable?

Government simply can't create private-sector jobs. Any politician who tells you it can is selling you something you don't want to buy. What government can do is create the conditions where the private sector can thrive - and hire. And that's where the City of Los Angeles has failed us.

That's why we've needed so-called "job czars" and "business SWAT teams" trying to attract or retain businesses to the City. I'm happy for the limited successes they've had, but they're symptoms of the real problem -- not a cure. A city with rational and progressive pro-business policies shouldn't have to resort to gimmicks.

And we also need strong leadership to address the crisis in our schools.

There aren't any silver bullets. Big projects like football stadiums get the headlines, but no single project can even come close to having the same impact on our economy as smart, business-friendly reform of our tax and regulatory climate.

We must also educate people that the word "industrial," as in industrial land use, is not a dirty word. It's a green word - green and lush with jobs, tax revenues and growth.

And we must start by reviewing the structure of City government itself. There are somewhere around 40 City departments, bureaus and commissions - to be honest, I've lost count. It's a bureaucratic nightmare.

Why do we have full-time paid Public Works Commissioners when we're freezing police hiring, and cutting firemen and paramedics? Shouldn't we identify functions that aren't providing real benefits to our neighborhoods and get rid of them first before we stop hiring cops? Shouldn't a hiring freeze on police officers or a reduction of firefighters be the last thing we do instead of the first?

Until we stop nibbling at the edges and enact significant structural reforms businesses will continue fleeing the city. It's not glamorous work. But strong leadership usually isn't.

The Los Angeles Unified School District has become an educational gulag, from which we have a moral obligation to free our city's children.

Parents are faced with excruciating choices, as they struggle to give their own children an education that fully prepares them to compete and win in a hypercompetitive global economy.

Some simply give up. In the same way businesses are fleeing to neighboring cities with more progressive growth policies, parents are moving to nearby cities with better schools, like Calabasas or Pasadena.

The pieces are in place for a new model of public education in the city. Elementary education remains relatively strong at the neighborhood level. We have some terrific magnet schools. And some of our most innovative and effective educators are running charter schools, and they're proving that great things can happen when you give smart

and dedicated teachers the freedom to innovate. '

We have to scale down, starting with smaller schools which are tied to neighborhoods. Everyone who studies successful public schools comes to the same conclusion: local control is key. That, in turn, means we have break up that groaning behemoth, the Los Angeles Unified School District. Nearly 700,000 students. Around 30,000 teachers. 1100 schools, spanning more than 700 square miles. The scale is all wrong.

Being decisive is about far more than simply making choices.

Neighborhood control over the schools can produce better results. That's why I support the "parent trigger," which gives parents the power to change their schools' leadership or bring in a charter operator based on a simple majority vote.

The school, bu reaucracy and the teachers union have been put on notice: if they can't give our children the education they need to succeed in life, then parents will step in and get it done - with or without them.

When you see families moving to Calabasas for the schools, and then commuting to EI Segundo for the jobs, you can understand the true scope of our problems.

So let me raise the question: what is Los Angeles willing to do to adapt? What of the past is it willing to give up to make room for the future?

This is an exciting moment. I believe there is an opportunity here for the city to redefine itself ... to hang a question mark on things it has long taken for granted. Our jobs and education crisis gives our elected officials permission to make sweeping changes. The question is whether they can be disruptive, decisive demanding and compassionate enough to be real leaders.

We need to build a decision-making model that can bring people together -- while still producing meaningful results, using the power of facts.

When I chaired the Los Angeles Police Commission, we were faced with a difficult choice. The contract of Chief Parks was up for renewal. He was very popular in the community, and most people expected that he'd be rehired for another term.

But the real question was about his effectiveness as a police chief. And to answer that question, we looked closely at the data, which showed that crime was on the rise, We spoke with the rank-and-file at the LAPD, who shared with us how morale was falling. And with all the facts in hand, we made an informed decision. Now, it's in nobody's political playbook to fire a career LAPD officer with deep community support, and hire someone from Boston instead. But it proved to be the right call and is paying dividends today,

You can maintain the integrity and power of your ideas while still being inclusive and open to other views, The properties we've developed at The Grove and elsewhere are based on a very specific vision of an experience we want to deliver. But along the way we've kept open the lines of communication with everyone who's had an interest in our projects. And that approach has led to tremendous community support for our work.

A strong and decisive leader not only gets results, but can also give people a stake in government that they've never had before.


To be disruptive, you must embrace calculated risk, and build a team of smart, committed, and truly innovative policy entrepreneurs.

In the City of Los Angeles, a consequential leader needs to be a visionary and a man-

The Mayor has great freedom to hire and fire General Managers.

But having that power is meaningless, unless the Mayor hires people who set ambitious goals - as well as plans to achieve them, and then holds them accountable.

From the very start, the Mayor must sit down with the GM's and other key leaders, and ask each of them to outline their top three priorities. They need to be bold, specific and measurable. The airport contract I cited earlier is a prime example of what happens without that kind of leadership from the top.

When we hired Bill Bratton, he came to us with one simple, stunning objective. He told us that under his leadership, crime in Los Angeles would drop by 20 percent.

He didn't quite get there ~- but he came really close. And because he set such an ambitious target, he created for himself the space he needed to take risks.

That's the kind of culture I want to see across all our City departments. A culture that encourages big ideas, and where managers are given the support they need to make those ideas happen.

And to be demanding, you must hold yourself and your team accountable for results.

I'm not someone who'll say you can "run government like a business." They're just not the same thing, and successful executives often fail in high government positions because they're unable to adapt to those basic differences.

But I do believe that too often there's a lack of personal accountability in government that wouldn't survive in a well-managed business.

You must hire strong managers, and support them as they pursue ambitious objectives. But if they're not up to the task, you have to be ready to act. I certainly hope the Mayor demonstrates as strong a commitment to accountability, as we learn more about the growing corruption scandal at the Department of Building and Safety.

Let me close with a final thought. On the wall of every conference room at Caruso Affili~ ated, in letters so large that no one can miss it, I've installed a simple credo: "Urgency" and "Relentless Follow-Up."

When it comes right down to it, that's what's missing from our City today. There is no sense of urgency among our political leaders, even as the quality of life in our City slips away.


Despite all our challenges, I'm optimistic about our future. Better days are ahead. I've seen how, strong, confident and creative leadership can overcome just about any obstacle, and we must demand that.

ager, both dreamer and doer, who understands the character of the city -- and the times in which we now live.

A leader who sets clear priorities that reflect the needs of our city.

A city where families want to live and where their children can learn.

A city where work is plentiful and job creation is encouraged.

A city where neighborhoods provide a sense of community and belonging.

A city where freedom means you aren't trapped in congestion for hours on end but have ease of transit.

And a city where people feel at peace - safe and secure in their homes and on their streets.

To me, ladies and gentlemen, that is a vision for a livable Los Angeles. And it is a vision this city could fulfill with a leader who is decisive, disciplined, demanding, yet compassionate.

Thank you again for joining me here today, and I look forward to answering your questions.

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