LOS ANGELES (CBS) — The Los Angeles City Council gave a boost Friday to local businesses that bid on city projects worth more than $150,000.
KNX 1070’s Vytas Safronikas reports the council unanimously approved the so-called local preference ordinance that gives an 8 percent advantage to local businesses during the review and scoring phase of city contracts.
Mayor Antonio Villaraigosa told a gathering of several hundred Los Angeles Chamber of Commerce members last week that the ordinance introduced by Councilmen Paul Krekorian and Bernard Parks could lead to the creation of 10,000 new jobs in the city.
“This ordinance has been lingering for over a year and that means that we probably have let literally hundreds of millions of dollars’ worth of contracts of some type, yet people did not have that local preference,” said Parks.
The ordinance is intended to offset the high cost of being a business with an address in the Los Angeles region. Office space in the metropolitan area can be as much as 40 percent higher than the national average, according to a report by the City Attorney’s Office.
The city government paid out more than $2 billion on goods, services and construction during the 2010-11 fiscal year for all departments, including airports, the harbor and the Department of Water and Power. It is estimated that about 15 percent of the contract dollars went to local businesses, according to Villaraigosa’s office.
The ordinance could help department general managers meet a goal set by Villaraigosa for at least 25 percent of contracts going to local businesses.
The new rules require departments to consider the bids from local businesses at 8 percent below their submitted value for contracts where selection is based primarily on the lowest bid.
A bid from a local business that comes in at $1 million will be evaluated at $920,000. It will also give an 8 percentage point boost on contracts that are scored on a variety of other factors.
The ordinance could increase the total cost to the city of contracts. However, Krekorian said the ordinance will be a net positive, bringing in more revenue in the long term through sales, property and other taxes from employees at local businesses that benefit from the measure.
To qualify, businesses will have to have an address in Los Angeles County and have either 50 full-time employees or half of their full-time employees work 60 percent of the time in the county.
A number of council members said they wanted the preferential treatment go only to businesses within the city limits, but the city’s charter requires the benefits be extended to businesses across the county.
The council approved a motion by Councilman Richard Alarcon directing the city attorney to draft a ballot measure for the next citywide ballot that will ask voters to amend the charter to narrow the benefit only to businesses located within the city.
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