More to La Kretz Than Meets the Eye … Like Say … the Unimaginable Future of Los Angeles

BACKTALK—(Editor’s Note: This is a response to Jack Humphreville’s CityWatch article La Kretz Innovation Center: A Pay to Play Pet Project’).  I am the Co-Founder and CEO of the Los Angeles Cleantech Incubator (LACI), the primary tenant of the La Kretz Innovation Campus (LKIC).   I can’t speak to the primary thesis of your article on the LKIC – that somehow the LKIC campus is some kind of quid pro quo for Mr. La Kretz’s Hollywood development – but I can speak to some of your points regarding the Campus.

1) The La Kretz Innovation Campus is not a “pet” project of Mayor Garcetti nor Councilmember Huizar.   The project was envisioned by Mayor Villaraigosa in 2008 and the campus was purchased in 2010.  LACI was born in 2011 and is part of a comprehensive plan to build a green economy for the City of Los Angeles.  To describe it as a pet project denigrates the thinking, hard work and commitment of dozens of people who have devoted themselves to helping Los Angeles become a green technology leader.

2) The LADWP was not “forced” to invest in this project as the Department has been a leading proponent of the work we do at LACI and the Campus that supports our work.  You may not be familiar with the requirements of AB32, which makes State utilities seek new sources of sustainable energy for generation, but LACI/LKIC is one of many initiatives that the Department is undertaking to meet these challenging requirements.

3) You note a City Council motion by Councilmenber Huizar to periodically report on the progress of LKIC.  For perspective, we continuously provide metrics to various departments of the City that monitor the progress of LACI and (now) the LKIC campus.  A few key highlights: 

  1. LACI has generated over $270million dollars in long-term economic value for the City of Los Angeles including more than 1200 direct and indirect jobs.
  2. LACI has helped 100 clean technology start-ups locate and prosper in the Los Angeles area.  Our companies have attracted more than $115 million in investment capital and filed over 200 patents.

4) You point out that LADWP has invested about $20M (it’s actually closer to $18M) and that its real estate investment should be closely evaluated.  I think this misses the point of LKIC – it’s not a real estate play but an economic development initiative – whose mission is to help develop family supporting jobs for the citizens of Los Angeles.  Yet, if one were to evaluate LKIC strictly from a real estate perspective, one would find that LADWP has leveraged its investment by more than 2:1; that it now owns a large piece of property in the fastest growing part of Los Angeles; and that it could sell this property tomorrow for a very sizeable profit.

Taking a step back, I would like to editorialize a bit myself on the importance of making the City of Los Angeles a cleantech innovation center, thus building a huge green economy for the City of Los Angeles and the role that LACI/LKIC play in this effort.

As background, the clean technology business sector has been the fastest growing sector on the face of the earth for the past five years, growing more than 25% annually.  Most experts predict continued growth for decades to come.  Frankly, we want to grab more than our fair share of this new business growth for Los Angeles’ citizens, thus providing long term job creation.   Not only are these higher paying jobs, but research shows that 1 out of 4 cleantech jobs are manufacturing jobs vs. 1 out of 9 in non-cleantech.  Building a huge green economy for LA will rebuild Los Angeles’ industrial base in tomorrow’s fastest growing industry.   In my way of thinking, this isn’t an optional extra pet project but a critically important long term initiative for Los Angeles.

Creating companies that have innovative clean technologies and helping them get to market is the most important component of expanding this embryonic market.  Cities that create an environment that nurtures these companies will reap long term rewards.  Think Silicon Valley.  Think San Diego’s biotech hub.   Think Boston’s Route 128 technology corridor. And this is exactly what the Los Angeles Cleantech Incubator does at its La Kretz Innovation Campus.  We help create innovative start-ups.

 How do we do that?  Well yes, we provide under-market priced real estate to our Portfolio Companies because these companies can’t afford market rates in Los Angeles. (they will simply go elsewhere if they can’t afford to do business here).  But, the heart of our efforts to help these companies is to provide them with seasoned, experienced coaching by successful entrepreneurs and -- once they’re ready – we introduce them to people/companies that might help them.  For example, right across the hall from where these companies are seated is the LADWP energy and water efficiency test and certification R&D labs.  This accelerates the growth of our Los Angeles-based start-ups by providing easy access to a leading utility’s R&D lab.  Nowhere else in the country – and perhaps the world – is there such close cooperation between innovators and utility engineers than at LKIC.

I have given close to six years of my life to this project because I believe it represents the future for Los Angeles.  I urge you and your readers to not only support this effort, but to encourage the City of Los Angeles to double-down on its investment.  It will pay off in ways unimaginable.

 (Fred Walti is the founder and chairman of the Los Angeles Cleantech Incubator.)