Krekorian/Parks Local Preference Ordinance Expected to Pass City Council [Video]

The City Council is expected to approve an ordinance Friday that would give a boost to local businesses that bid on city projects worth more than $150,000.

The so-called local preference ordinance introduced by Councilmen Paul Krekorian and Bernard Parks would give an 8 percent advantage to local businesses during the review and scoring phase of city contracts.

"At a time of sky-high unemployment in this city, we cannot afford to send our taxpayers' money to out-of-state businesses," Krekorian said. "The city should make its purchases in a way that helps local businesses create local jobs, and that's what this ordinance will do."

Krekorian where he talked in detail about the benefits he believed the ordinace would have for the city. (See attached video.)

Mayor Antonio Villaraigosa told a gathering of several hundred Los Angeles Chamber of Commerce members last week that the ordinance could create 10,000 new jobs in the city.

"Virtually every big city in the country has that but here," Villaraigosa said.

Despite Villaraigosa's effort to pitch the ordinance as a boon to businesses in the city, the city charter requires that the preferential treatment be extended to businesses in Los Angeles County.

The ordinance is intended to offset the high cost of being a business with an address in Los Angeles County. 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 spent more than $2 billion on goods, services and construction during the 2010-11 fiscal year for all departments, including the airports, the harbor and the Department of Water and Power. It is estimated that less than 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 would 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 would be evaluated at $920,000. It would 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 would 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 would 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.

-- City News Service