A letter from Dr. Manuel Pastor
Director, USC Equity Research Institute

When announcements began rolling in that Los Angeles would be hosting the Super Bowl in 2022, the World Cup in 2026, and the Olympics and Paralympic Games in 2028, leaders in the private, public, nonprofit, and philanthropic sectors came together to take steps to link the increase in economic activity and investment to a vision for a more equitable and sustainable Los Angeles region. In addition to an influx of spending for major entertainment, cultural, and sporting events, there are billions of dollars for public infrastructure projects, such as Measure M and LAX Modernization.

We have an opportunity to demonstrate how an historic amount of investments can spur both economic growth and economic equity. The launch of the Regional Alliance Marketplace for Procurement (RAMP) is an important step for our region. It will help ensure investments reach our vibrant pool of diverse small businesses and neighborhoods that usually miss out on large-scale investment opportunities.

To support the rollout of the City’s new RAMP system, we are excited to have partnered with the Los Angeles Business Council Institute (LABCi) on the launch of their new Compete4LA Small Business Database. We have been pleased to partner with LABCi and USC Center for Economic Development over the past several years to provide data and analysis to support the implementation of recommendations from our report Los Angeles as a Host City: Identifying Investment-Ready Neighborhoods for Equitable and Inclusive Procurement (2019). Based on an initial study of the feasibility of replicating London’s successful online portal CompeteFor initially established for the 2012 Olympics and in our interviews with regional stakeholders who stressed the need for a more centralized procurement system paired with a robust business engagement program, we realized the importance of identifying and mapping businesses in disadvantaged yet high opportunity areas in order to increase the economic impact and distribute benefits more equitably throughout the region. The result is the Compete4LA Small Business Database.

We have an opportunity to demonstrate how an historic amount of investments can spur both economic growth and economic equity.

In developing a database of small businesses for targeted outreach and assistance, we first identified neighborhoods with the following characteristics:

High-need neighborhoods: These are areas where lower-income, communities of color live and where investment could help to reduce neighborhood inequity through economic investment and targeted workforce and economic development strategies. They include tracts where the household median income is less than 80 percent of the county HUD Area Median Family Income and are tracts in the top half of census tracts for renters and people of color.

High-opportunity neighborhoods: These are communities that have either been targeted for additional investment or programs that build resources that residents can utilize for start or grow businesses or community members have high education levels and potentially greater professional skills for use in business. They are either already designated as Opportunity Zones, Promise Zones, Hub Zones or are in the top half of census tracts in terms of higher education levels.

Small business priority neighborhoods: These are communities that historically may not have had access to capital to grow their businesses. They are in the bottom half of census tracts for business loans per employee.

We then categorized investment-ready neighborhoods into three tiers based on the level of investment and efforts necessary to successfully engage small businesses:

Tier 1: Information Short
Neighborhoods classified as Tier 1 meet the following criteria: high-opportunity and small business priority. Business owners in Tier 1 neighborhoods may benefit from outreach to participate as vendors or suppliers for major events and regional investment. Outreach and information about how to sign-up for the portal and/or apply to provide services during major events could help engage business owners and get them involved.

Tier 2: Opportunity Rich
Neighborhoods classified as Tier 2 meet all three criteria: high-need, small business-priority, and high-opportunity. Businesses in Tier 2 neighborhoods may benefit from outreach and additional one-on-one technical assistance to participate as vendors or suppliers for the upcoming events. Businesses in these communities often lack one-on-one relationships and knowledge of opportunities to increase business participation and success. Providing business owners support through technical assistance and trainings that elevate their work and prepare them to successfully bid and complete projects could increase hiring and help build wealth in these communities.

Tier 3: Equity Ready
Neighborhoods classified as Tier 3 meet the following criteria: high-need and small-business priority. Tier 3 communities need additional investment by government, philanthropic, and finance organizations alongside outreach and one-on-one technical assistance with business owners. These neighborhoods may suffer from historic neglect due to redlining and institutional racism, and are not currently targeted by the federal or state for additional programmatic support. These communities require a deeper level of engagement and support compared to Tier 1 and Tier 2 neighborhoods. Investment in these neighborhoods requires investors to form new partnerships with businesses, foundations, finance organizations to support and engage small businesses and entrepreneurs. Funding and investing in local community-based organizations also ensure that investment can have an equitable impact.

We also identified eight key industry sectors that are most relevant to the investment opportunities coming to the region. These sectors are construction; manufacturing; wholesale trade; retail trade; transportation and warehousing; information; professional, scientific, and technical services; and accommodation and food services. For more detailed information on how we determined the three tiers, see the methodology section and Appendix A of our report Los Angeles as a Host City.

Made possible and hosted by USC’s Center for Economic Development, the Los Angeles region now has an easily-accessible and publicly-available database of small businesses. We are now one step closer to achieving a goal of doubling the number of businesses in the City of Los Angeles’ Regional Alliance Procurement Marketplace for Los Angeles County from 80,000 to 160,000—and doubling the number of small and diverse business that are certified from 20,000 to 40,000.

We appreciate the leadership and commitment of the Los Angeles Business Council Institute for focusing on procurement as an opportunity to invest in businesses and communities and for turning a rallying moment of hosting the 2028 Olympic Games into a long-term investment for a more equitable future.

Dr. Manuel Pastor
Director, USC Equity Research Institute