In response to the 1992 Los Angeles riots, the federal government, city and county officials, commercial banks and community leaders established the nonprofit Los Angeles Community Development Bank (L ACDB). This public-private partnership was a new development model, designed to spur economic growth in some of Los Angeles' most disadvantaged areas. The L ACDB was capitalized with $435 million from the U.S. Department of Housing and Urban Development and ranks as the federal government's largest inner-city lending initiative. By January 2001, however, the bank had experienced unacceptably high losses and was seeking permission to continue operations, after reducing its staff by half and closing most of its offices. This article examines why this innovative publicprivate economic development partnership confronted such difficulties. Public-private partnerships continue to be an important vehicle for urban economic development. This case study provides a warning of potential pitfalls that can occur from such arrangements.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.