Economic Change Is Slow to Come to South Los Angeles

By Zusha Elinson and Paul Overberg Features Dow Jones Newswires

Former hedge-fund trader Sam Polk's newest venture sells healthy food in an unusual location for an unusual price.

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Everytable is located in a South Los Angeles neighborhood where 43% of the population lives below the poverty line and it offers meals such as jerk chicken with coconut rice, beans, kale and plantains for under $5.

"There's a lot of communities that are incredible that just get overlooked," said Mr. Polk.

This community has a turbulent history. Twenty-five years ago this week, the Rodney King riots tore apart South Los Angeles for six days, leaving more than 50 people dead and causing more than $1 billion in property damage. Community leaders and entrepreneurs are still trying to revive the local economy. There are signs of success, but poverty persists.

South L.A.'s location near a rapidly developing downtown and the relatively low cost of housing compared with other parts of the city make it a prime target for gentrification. The median home value in the area jumped 13.6% to $418,100 in March from a year earlier, according to Zillow. The city is building a new subway line that is expected to bring jobs and development.

"There's a lot of new attention to South L.A., there's a lot of new people moving in -- more middle class, more professional, more white," said Manuel Pastor, a University of Southern California professor who has studied the area for years. "There's a lot of concerns about gentrification and displacement, but there's a lot of possibility of what that might mean for retail development and jobs."

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Yet wholesale economic change has yet to arrive in this 50-square-mile portion of Los Angeles that is home to 800,000 people. The poverty rate in South Los Angeles was 31.3% in 1990 and an average of 34.3% from 2011 through 2015, compared with 22.1% for the whole city, according to census data.

Unemployment over that time stood at 13.8% in South L.A. compared with 10.3% for the whole city.

A slice of South L.A. last year received a designation with the U.S. Department of Housing and Urban Development as a "promise zone" that will give it priority for federal grants.

Development is transforming much of Los Angeles. But private economic investment in South L.A. has not materialized even as crime has dropped and police-community relations have thawed, said Marqueece Harris-Dawson, a city council member who grew up in South Los Angeles.

In 1992, South L.A. gang wars and a booming crack trade fueled a record 1,094 murders in the city. Last year, there were 294.

"Since '92, the community behavior has changed, the police department has changed," Mr. Harris-Dawson said. "The people whose behavior has not changed is the financial sector."

Mr. Harris-Dawson points to the corner of Manchester and Vermont streets where a shopping center stood during his youth. Rioters burned it to the ground in 1992. Plans have come and gone, but the lots remain vacant today.

Retail businesses have been slow to return to the area because "insurance costs were astronomical" owing to the stereotype that the area was "prone to conflagration," said Josh Sides, a professor at Cal State Northridge.

Desiree Edwards, owner and chef at the Watts Coffee House, a longtime neighborhood restaurant, said South Los Angeles residents have to travel far in order to buy quality groceries because of a lack of supermarkets.

The racial and ethnic makeup of South Los Angeles has shifted dramatically since the riots. In 1990, half the population was African-American and 45% was Latino, according to census data. Today, South Los Angeles is 65% Latino and 29% African-American.

Mr. Pastor, the USC professor, said people in the area face two problems: working poverty among Latino immigrants and higher unemployment for African-Americans.

"The employment challenge in South L.A. requires a lot of small solutions," he said. "Promotion of small business, a lot of antidiscrimination work in hiring, and a lot of work around job programs for those leaving incarceration."

Mr. Pastor pointed to some positive developments for the working poor, including the plan to raise the minimum wage in the city to $15 by 2020.

New businesses such as LocoL, a healthy fast food joint opened by celebrity chefs Roy Choi and Daniel Patterson in Watts, and Everytable are also helping to bring change to South L.A.

Mr. Polk, 37, quit King Street Capital Management seven years ago and started a nonprofit to help families in South Los Angeles get access to healthy food. Last year, he opened Everytable with David Foster, who previously worked in private equity, as a public benefit corporation. The store also has locations in other parts of Los Angeles like downtown where the same meals go for about double the price.

"We have this economic system that propagates inequality," said Mr. Polk. "Everytable is sort of reversing that and creating this system that actually makes it so everyone can have access to the same thing."

Mr. Polk said South L.A.'s economy is improving, but "there has been so much systemic disinvestment and disenfranchisement, it is really challenged."

Write to Zusha Elinson at zusha.elinson@wsj.com

(END) Dow Jones Newswires

May 05, 2017 14:39 ET (18:39 GMT)