CENTRAL CITY ASSOCIATION OF LOS ANGELES
Downtown’s Contribution to the City of Los Angeles’ Economy, 1999-2019
Q1 2020 | Prepared by Beacon Economics, LLC About Beacon Economics
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About Central City Association
Central City Association (CCA) is the premier advocacy organization in the Los Angeles region and leading visionary on the future of Downtown Los Angeles (DTLA). Since its founding in 1924, we have produced meaningful results for our members and the Downtown community. We maximize our effectiveness by leading, convening and collaborating with stakeholders to form strong partnerships and coalitions. CCA represents the interests of 400 businesses, trade associations and nonprofits from a broad range of industries that collectively employ more than 350,000 people in the county.
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Or, visit our website at www.BeaconEcon.com to thedeveloper inattainingentitlements,easementsandother planningapprovals. the relocation of residents and the Los Angeles Children’s Center. In addition, the city expedited and provided assistance total, the city borrowed $58.5 million for the project, which was used to acquire and prepare the site, as well as to pay for In area. the of construction the support to funds public provided city the First, agreement. the of part as commitments LIVE L.A. as known later district entertainment foot square million Staples 5.6 a the as called well be as Center, later would which arena, sports new a build to Company Development Arena L.A. the engaged city the which (“DDA”),in Agreement Development and Disposition the approved 13-2) of margin a (by Council City the 1997, 31, October on city, the of area and this revitalizeempty.To vacant was space was retail existing land the of the much of and undeveloped, 25% another while lots, parking of comprised was neighborhood Park South the of 25% 1990s, early the In neighborhood. Park South the in occurred only, name in least at initiative, known least the Perhaps to repurpose provisions historic buildingsby inthezoning waiving certain code. brainchildMayorthe of was project, which TomBradley, easier it made which Ordinance(1999), Reuse Adaptive the and happened This city. the of Subway Line part Red the included initiatives famous more the this of severalMayoralSome of Administrations. course the overrevitalize to efforts of number a undertook Angeles Los of City the response, In streets, anddeteriorating intheregion’s publicservices oncevibrant core. Southern broader region. California the and city the of parts other to thousands the by fled jobs and People suburbanization. to victim fell DTLA nation, the throughout areas downtown other many in as II, War World after Yet Angeles. Los in life civic and During the first half of the 20th century, Downtown Los Angeles (DTLA) was the undisputed center of economic, cultural, Executive Summary Business Law Review, 10(3), 483–545. 4 3 2 business/revitalization-projects-reawaken-downtown-los-angeles.html 1 Wharton D. Wharton R.(1999).SixWhoMadeItHappen. Retrieved &Norwood, from: https://www.latimes.com/archives/la-xpm-1999-oct-10-tm-20652-story.html Sotero, Dave (2013). First phase https://www.nytimes.com/2019/03/05/of Metro from: Red Line celebrates Retrieved 20-year anniversary. Times. The YorkSource. Retreieved from: New https://thesource.metro.net/2013/01/29/metro-rail-at-20-2/ Angeles. Los Downtown Reawaken Projects Revitalization 2019). 5, (March Vivian Marino, Parlow, Matthew J. (2002). Publically financed new sports facilities: Are they economically justifiable? A case of the Los Angeles Staples Center. University of Miami of University Center. Staples Angeles Los the of A case justifiable? economically they Are facilities: sports new financed Publically (2002). J. Matthew Parlow, 1 This process left behind dilapidated buildings, empty parking lots, decaying infrastructure, deserted deserted infrastructure, decaying lots, parking empty buildings, dilapidated behind left process This 23
4 The city made two major two made city The
Page 3 | Central City Association Page 4 | Central City Association • • • • • • • Broadway Park, the6thStreet Viaductandtheredesigns Lindsay ofPershing Plaza. Square andGilbert and First like development, under parks other and Park, Historic State LA and Park Hope Grand Park, Grand Commons, Park South like places bike with Downtown, propelled protected also have spaces open added and parks in have Investments Downtown. in that lanes Forward Spring and Main and MyFig like improvements streetscape in investments city by spurred been also has investment Private rail. by Beach Long and Angeles Los Valley, South Fernando San the region’sthe of center the at is DTLA network. Pasadena, Monica, toSanta connected now railis expanding and network, city’srailthe expand to income raisedhave initiatives ballot successful of series a years, 40 past the over Furthermore, the city. to today DTLA theCityofLA ismore thanithasbeenfordecades. important of rest the to compared population, and housing in growth high disproportionately seen has city’sbut the land, total Overall, DTLA has experienced a remarkable transformation since the late 1990s. DTLA accounts for less than 1% of share ofthecity’s salestaxreceipts increased from 19%to 23%. DTLA’smid-2000s, the since While 7%. to 5% from increased values property assessed city’s the of DTLA’sshare 1990s, late the Since 24%. to 18% from increased has Tax”revenue“Hotel or city’sTax(TOT)TransientOccupancy DTLA has become an increasingly revenueimportant generator for the city. Since the late 1990s, DTLA’s share of the $59,254 in2016. city’sthe restof the ratein same as economy, city’sthe of instead year per $57,695 average have been would wage the at grown had DTLA in wages If growth. wage citywide to contributor important an become has DTLA such, As the cityaverage; in2016DTLA wageswere 26%higher. than higher 15% were wages DTLA 1994, In time. over increased has wages LA of City and DTLA between gap The In 2016, DTLA employers’ paid an annual average wage of $74,883 compared to $59,254 for the entire city economy. industries. DTLA hasaccountedfor: city’s the of certain in growth job to contributor significant a been has DTLA jobs, total to contribution its Beyond Over theperiod1998-2016,DTLA accountedfor34percent ofallprivate jobsaddedto thecity’s economy. toSince thelate1990s,DTLA thecity’s hasbecomemore important economy, alongavariety ofmeasures. 43% oftheemployment growth intheProfessional, Scientificand Industries Technical Services 40% oftheemployment growth intheManagementofCompaniesandEnterprisesIndustries 64% oftheemployment growth intheConstructionIndustry 40% ofthecity’s Industry andEntertainment employment growth intheArts • • Revenue Generation Business Taxes • • compared to around $2,500fortheentire city. This gaphas increased over time. taxes business in year per $6,000 around generated DTLA in establishment business average the 2019, In Angeles. Los of City the and DTLA in establishment per generated taxes business of amount the tracks chart following The the city’s revenue. of 10% around for account taxes Business exemption. an obtain or tax business associated the pay (s), Certificate Each year, every person who engages in business within the City of Los Angeles is required to obtain a Tax Registration taxes accountforaround 60%ofthecity’s general fundrevenue. four these TogetherTaxes. Sales and Taxes) Property generate (which Values Property Assessed Taxes), (“Hotel” relation to DTLA’s growing contribution to four key revenue sources: Business Taxes, Transit Occupancy Taxes (TOT) Over the past 20 years, DTLA has become a more important source of revenue for the city. This change can be seen in 20 years. The first relates to DTLA’s contribution to thecity’s finances. This report considers two primary ways in which DTLA’s contribution to the city’s economy has changed over the past
Page 5 | Central City Association Page 6 | Central City Association • • • Transient Occupancy Taxes (TOT) Source: LosAngelesCityOfficeofFinance,Analysis byBeacon Economics $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 Business taxes perBusiness,3-year moving average DTLA receives more than22millionvisitors peryear, whogenerate arevenue peravailable room ofroughly $173. LIVEcomplex. the LA in Hotel Marriott JW the of construction and Hotel Ace the of renovation the include changes notable where DTLA, in complex entertainment the of growth the to attributed be can This total. city’s the of 24% to 18% from growing 1990s, late the DTLA’ssince city’sgreatly the increasedTransientTax” “Hotel Taxof has Occupancy or share(TOT) calendar days orless,a14%taxapplies. The TOT accountsforaround 5%ofthecity’s revenue. If a is property located within the City of Los Angeles and is rented out to transient occupants (such as hotels) for 30 $0
1999
2000
2001
2002
2003
2004
2005 City ofLosAngeles 2006
2007
2008
2009
2010 Downtown
2011
2012
2013
2014
2015
2016
2017
2018
2019 Assessed Property ValuesAssessed Property Source: LosAngelesCityOfficeofFinance,Analysis byBeacon Economics • • Source: Los AngelesCity OfficeofFinance, Analysis by Beacon Economics Hotel Tax ReceiptsinDowntown LosAngeles Percentage of City Total Total AssessedValue inDowntown LosAngeles Percentage of City Total 2% 3% 4% 5% 6 7% 8% 0% 1% 10% 15% 20% 25% 30% % in DTLA andagrowth locatedthere. inthevalue oftheproperties 7% of the city’s total since 1998. This change can be attributed to the growth in residential and commercial properties to 5% from growing time, over value city’sproperty the assessed of share greater a for accounted Finally,has DTLA by thecityandcounty. taxes accountforaboutathird Property ofthecity’s revenue. owners areProperty required to pay a tax based on the assessed value of their properties. These taxes are collected 5% 0%
1998 1998 1999 1999 2000 2000 2001 2001 2002 2002 2003
Downtown LosAngeles 2003 2004 2004 2005 Downtown 2005 2006 2006 2007 2007 2008 2008 2009 2009 Share ofCity(%)
Share ofCity(%) 2010 2010 2011 2011 2012 2012 2013 2013 2014 2014 2015 2015 2016 2016 2017 2017 2018 2018 2019 $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $0 $5,000 $10,000 $15,000 $40,000 $25,000 $30,000 $35,000 $40,000 $45,000 $50,000
Millions Millions
Page 7 | Central City Association Page 8 | Central City Association Source: LosAngelesCityOffice ofFinance,Analysis byBeacon Economics • • Sales Taxes
Percentage of City Total Downtown LosAngeles Sales Tax Receipts contribution to thecity’s salestaxreceipts hasgrown from 19%to 23%ofthetotal sincethistime. DTLA’s2007. since detected be can trend clear a but 1990s, late the as back far as available not are data tax Sales revenues. city of 10% about for account taxes Sales government. the to collections their send they then and sale goods their of on point the at tax sales collect Retailers governments. local and state the by administered are Taxes Sales 10% 15% 20% 25% 5% 0
2007
2008
2009 Downtown LosAngeles 2010
2011
2012
2013 Share of City(%) 2014
2015
2016
2017
2018
2019 $0 $20 $40 $60 $80 $100 $120 $140 $160
Millions • • • • Employment DTLA accounted forallofthecity’s joblossesinthe sector. where warehousing, and transportation sector,and the in losses job citywide all of 65% for accounted DTLA where industry, insurance and finance the in losses job citywide of contributor leading a been has DTLA time, same the At of anumberindustrieswithinthecity. Mostnotably, DTLA hasaccountfor: Beyond its importance to total citywide job growth, DTLA has been a significant contributor to the employment growth to thecity’s economy, whichadded60,000jobsover theperiod. DTLA has added jobs at a much faster rate than in the rest of the city. DTLA has accounted for 34% of all jobs added period, this Over 10.4%. of jobs. representsgrowth 20,000 aroundThis a added has economy DTLA the 1998, Since late 1990s. city.the in DTLA’sthe located since jobs sectorrelativelystable private total been the has employment city of share of 19% roughly represented This jobs. sector private 215,000 around to home was Angeles Los downtown 2016, In 43% oftheemployment growth intheProfessional, Scientificand Industries Technical Services 40% oftheemployment growth intheManagementofCompaniesandEnterprises Industries 64% oftheemployment growth intheConstructionIndustry 40% ofthecity’s Industry andEntertainment employment growth intheArts
Page 9 | Central City Association Page 10 | Central City Association • • • Source: CountyBusinessPatterns, Analysisby BeaconEconomics Employment StatisticsforDTLA andCityofLA Total AllIndustries Wholesale Trade Utilities Transp./Warehouse Retail Trade Real Estate Prof,Sci,Tech. Other Services Mining Manufacturing Management Information Health Care Finance/Insurance Education Construction Arts/Ent. Agriculture Admin Support Accommodation Downtown fewer than1%ofworkers citywide. DTLA is also home to a large share of mining and utilities industries, but these are relatively small industries, employing input to businessoperations. core a still is information and interaction face-to-face where environments dense vibrant, in thrive industries these Typicallyeconomy. city’s the for wealth generate that industries paying high relatively are these part most the For located indowntown, butDTLA ishometo agreater share ofthecity’s employment inthefollowingindustries: share of city employment across major industry sectors. The revealschart that 20% of all of the city’s employment is DTLA’sreveals below chart city’sThe industries. keythe of many of share disproportionate a to home is Downtown Wholesale Trade (34%) Professional, Scientificand (30%) Technical Services Management ofCompaniesandEnterprises(28%) Finance andInsurance (45%) (25%) andentertainment Art 2016 Employment in DTLA 214,584 30,041 14,548 32,835 11,726 10,676 14,214 22,187 10,043 11,760 24,414 1,356 4,429 5,443 8,000 4,795 5,638 2,309 192 8 Jobs added/lost 1998-2016 Downtown - 24,694 12,078 20,224 - 5,252 -1,298 3,830 4,640 4,292 6,418 2,606 3,020 5,250 7,590 -853 107 681 922 182 704 -10 City ofLosAngeles Jobs added/lost 1998-2016 -103,011 34,803 19,367 16,086 57,253 60,021 20,094 17,783 -8,071 -9,703 -2,832 9,600 1,120 1,057 1,545 5,824 -289 -851 230 -6 DTLA Contribution Growth -0.43% -153% to LA 306% -24% -65% 40% 13% 22% 64% 40% 21% 21% 34% 52% 60% 26% 43% -3% 3% Source: CountyBusinessPatterns, Analysisby BeaconEconomics Source: CountyBusiness Patterns, Analysis by BeaconEconomics • • • Industry ShareIndustry of Total Employment inDTLA andCityofLosAngeles, 2016 Downtown’s Employment share intheCityofLosAngeles, ofMajorIndustry 2016 Transp./Warehouse Transp./Warehouse Total AllIndustries Finance/Insurance Finance/Insurance case forDTLA. the is than economy city’s the of share larger a up make Care Health and Manufacturing Trade,Retail contrast, By the DTLA economythanthey are fortherest ofthecity. Finance and insurance, Professional, Scientific and Technical Services and Wholesale trade are each larger shares of The following chart compares the importance of each major industry to the DTLA and City of Los Angeles’ economies. Accommodation Accommodation Wholesale Trade Wholesale Trade Admin Support Admin Support Manufacturing Manufacturing Other Services Other Services Prof,Sci,Tech. Prof,Sci,Tech. Management Management Construction Construction Retail Trade Retail Trade Health Care Health Care Information Information Real Estate Real Estate Agriculture Agriculture Education Education Arts/Ent. Arts/Ent. Utilities Utilities Mining Mining 0.0% 0% 2.0% 10% 4.0% 20% City ofLosAngeles 6.0% 30% 8.0% 10.0% Downtown LA 40% 12.0% 50% 14.0% 60% 16.0% 18.0% 70%
Page 11 | Central City Association Page 12 | Central City Association Wages Source: CountyBusiness Patterns, Analysis by BeaconEconomics • • $70,000 $80,000 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 Annual Average Private Wage: CityofLosAngeles vsDowntown the average citywage;in2016DTLA wageswere 26%higherthecity’s average. than higher 15% were wages DTLA 1994, In time. over increased has wages LA of City and DTLA between gap The In 2016,employers paidanaverage wageof$74,883inDTLA compared to $59,254fortheentire city. $0
1994
1995
1996
1997
1998
1999
2000
City ofLosAngeles 2001
2002
2003
2004
2005
2006 Downtown
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016 • • • Source: CountyBusinessPatterns, Analysisby BeaconEconomics
Share of City Total Downtown LosAngeles Total Payroll 19% 20% 21% 22% 23% 24% 25% same rate asintherest ofthecity, citywide average wageswouldhave beenover $1,500lowerperyear in2016. the at grown DTLA in growth wage had words, the other In 2016. in $59,254 of Without instead year per $57,695 at growth. stood have wage citywide to contributor major a been performance of DTLA, wages in the City has of LA would have increased by only economy 83%, meaning that citywide wages would DTLA the of performance The frame, increased wagesintheCityofLA by 87%. time same this Over doubling). (practically 105% by increased DTLA in paid wages the 1994-2016, period the Over DTLA economy hasbeenadriver ofcitywidewagegrowth over thisperiod. the of performance the that meant has This payroll. total city’s the of 24% to 22% from grown has DTLA payroll in 1994, Since 1990s. the in case the was than today payroll city of share larger a for account DTLA in Jobs
1994
1995
1996
1997
1998
Total Private Payrolls ($000s) 1999
2000
2001
2002
2003
2004
2005
2006 Share ofCityPayroll (%) 2007
2008
2009
2010
2011
2012
2013
2014
2015
2016 $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000
Payroll in Millions
Page 13 | Central City Association Page 14 | Central City Association Transp./Warehouse Establishments • • • Establishments Source: County Business Patterns, Analysisby BeaconEconomics Finance/Insurance Establishment Changeby Sector 1998-2016 Accommodation Wholesale Trade Admin Support cost areas. high in contraction industry’s the to contributed have globalization and automation whereby business economy national the manufacturing of in trends number broader of indicative is the establishments manufacturing in change while This 1,000. by declined industries, establishments Accommodation and Retail Services, Technical and Scientific Professional, Trade, Wholesale the in occurred DTLA in establishments business in growth biggest The more employ workersDTLA onaverage thanintherest ofthecity.in establishments business the that means simply this city, the of rest the in than jobs more At the same time, DTLA’s share of the city’s total business establishments has fallen. Since DTLA has added relatively There were nearly1,000more businessestablishmentsinDTLA in2016than1994. Manufacturing Other Services Prof,Sci,Tech. Management Construction Retail Trade Health Care Information Real Estate Agriculture Education Arts/Ent. Utilities Mining -1200 -1000 -800 -600 -400 -200 0 200 400 600 800 • • • Source: CountyBusiness Patterns, Analysis by BeaconEconomics Number of Small Businesses Source: CountyBusinessPatterns, Analysisby BeaconEconomics
Small BusinessEstablishmentsinDowntown LosAngeles Percentage of City Total Number ofBusinessEstablishments,Downtown LosAngeles 10,000 12,000 17.0% 17.5% 18.0% 18.5% 19.0% 19.5% 20.0% 16.5% 2,000 4,000 6,000 8,000 business accountedfor95%ofallestablishmentsinDTLA. small 2016, In economy. DTLA the in establishments of majority overwhelming the for account businesses These Over theperiod1994-2016,around 1,900additionalsmallbusinessestablishmentsemerged intheDTLA economy. those establishmentsthathave 50employees orfewer. as defined areeconomy. businesses DTLA Small the to businesses small of importance the tracks below chart The 0
1994 1994
1995 1995
1996 1996
1997 1997
1998 1998 Number ofSmall Establishments 1999 1999
2000 2000
2001 Establishments 2001
2002 2002
2003 2003
2004 2004
2005 2005
2006 2006 Share ofCity(%) Small Establishment Share 2007 2007
2008 2008
2009 2009
2010 2010
2011 2011
2012 2012
2013 2013
2014 2014
2015 2015
2016 2016 90.0% 91.0% 92.0% 93.0% 94.0% 95.0% 96.0% 9500 10000 10500 11000 11500 12000 12500 13000
Small Business Establishment Share Total Number of Establishments
Page 15 | Central City Association Page 16 | Central City Association Conclusion or “Hotel Tax” revenue has increased from 18% to 24%. Since the late 1990s, DTLA’s share of the city’s assessed property DTLA’srevenuecity.1990s, generator the late for the important Since city’sthe of share TransientOccupancy Tax (TOT) increasingly an become has DTLA higher.Third, 26% were wages DTLA 2016 in average; city the than higher 15% were entirethe economy.for city increasedhas wages over DTLA1994, wages In LA time. of City DTLAand between gap The to the city’s highest paying jobs. In 2016, DTLA employers paid an annual average wage of $74,883 compared to $59,254 DTLA has accounted for 34 percent of all private jobs added to the city’s economy. Second, DTLA is increasingly a home Angeles today than it has been for decades. This change can be observed along a variety of metrics. First, since the 1990s Overall, DTLA has experienced a remarkable transformation since the late 1990s. DTLA is more important to the City of Los 19% to 23%. As the center of the city’s economy, DTLA warrants the attention it has received from the city’s policymakers. DTLA’smid-2000s, the since While 7%. to 5% fromincreasedvalues city’s the fromincreasedreceipts of sharetax sales Appendix The followingzipcodesare usedto define DTLA: balanced panelofzipcodes,andforDowntown LosAngelesthefollowingwere used: (2001). Glaeser in outlined framework same the employ we employment, industry-level estimate Tolevel. code zip the at businesses for statistics annual provide which data, Patterns Business Codes ZIP Census’ the from derived were Angeles Los of City the and Angeles Los Downtown for figures Employment on UrbanandMetropolitan Policy, 2001. 6 Glaeser, Edward Ludwig, Matthew E. Kahn, and Chenghuan Chu. Job sprawl: Employment location in US metropolitan areas. Washington, DC: Brookings Institution, Center Downtown LosAngeles ZipCodes 90012, 90013,90014,90015,90017,90021,90071. 6 For the City of Los Angeles we relied on a on relied we Angeles Los of City the For
Page 17 | Central City Association CENTRAL CITY ASSOCIATION OF LOS ANGELES
Downtown’s Contribution to the City of Los Angeles’ Economy, 1999-2019