LA WATCHDOG--On Tuesday, the Board of Water and Power Commissioners voted 4 to 1 to approve an above market, 10 year, $41 million lease of four vacant floors of subpar office space at Figueroa Plaza, a 615,000 square foot, City owned office complex located north of the downtown Central Business District.  

LA WATCHDOG--Mayor Eric Garcetti and his budget team are putting a full court press on the Board of Water and Power Commissioners to approve an above market, 10 year, $41 million lease for four vacant floors of office space at Figueroa Plaza, a two tower, 615,000 square foot City owned complex located north of the Central Business District in DTLA.  (Photo above: Sculpture by Terry Allen. The bronze statue is located in Downtown L.A. at 7+FIG Plaza, on the corner of 7th and Figueroa Street, outside the corporate offices of Ernst Young) 

But this deal, like the previous 10 year, $63 million lease for six vacant floors that was proposed in June, does not pass the smell test because this above market lease is not in the best interests of the Department of Water and Power or its Ratepayers. 

Which leads us to the question of whether the five Commissioners, led by President Mel Levine and Vice President Bill Funderburk, will stand up for the interests of the Department and the Ratepayers or will they bow to the pressure from Mayor Garcetti and his budget team who are looking to balance the City’s budget on the backs of the Ratepayers? 

Figueroa Plaza is not considered a desirable location for law firms, investment banks, commercial banks, consulting firms, or other professional organizations that occupy Class A space because of its poor location north of the Central Business District.  In addition to being out of the way, this older building has a poor reputation for maintenance, services, and amenities.  This is not helped by rent roll dominated by government employees.  

Yet the City wants our Department of Water and Power to pay Central Business District Class A rents for this subprime space.  At the same time, the City wants DWP to pony up $9 million for tenant improvements, an expense that is usually born by the landlord, in this case, the City of Los Angeles.  

From the Mayor’s perspective, in the first year of the lease, the City will receive $3 million in rent and “save” $9 million in tenant improvements.  This $12 million swing will help the City close its projected $85 million budget deficit for the upcoming fiscal year.  

The Department maintains that it needs this additional space to accommodate 700 new employees.  But without a well thought out Space Utilization Plan for its 9,576 employees, an 8 to 10 year lease is inappropriate, especially given its above market cost.  

Any space plan would need to address the updating of DWP’s 50 year old historic headquarters building located across from the Music Center in downtown Los Angeles.  But this is problematic as IBEW Local 18, DWP’s domineering union, will assert jurisdiction over all the work at overtime rates, doubling the cost and the time to completion.  This will cost Ratepayers an additional $150 to $200 million.  

The question has also been raised whether the IBEW and Union Bo$$ d’Arcy would claim jurisdiction over the work at Figueroa Plaza.  

At its meeting on September 20, the Board of Commissioners discussed the proposed $41 million lease in closed session.  When the $63 million lease was on the agenda in June, the Board deferred the matter until a later time.  As a result, there has not been a public discussion or any outreach involving this controversial lease whose main beneficiary appears to be the City, not DWP or the Ratepayers. 

The Department has prepared a 229 page memo outlining this transaction. This includes a 161 page report that justifies the lease. But several experts, including potential tenants and their representatives, have discounted this report stating it was “made as indicated” and does not reflect the real rental market. 

Will the Commissioners conduct an open hearing on this above market lease?  Will the Commissioners demand that DWP prepare a Space Utilization Plan before entering into this above market lease?  Will this study include many different alternatives, including selling the DWP headquarters and moving to an area that would benefit from the economic development?  Will the Commissioners demand that the Department update its Personnel Plan to reflect the addition of 700 new employees?  

In other words, will the Commissioners act in the best interests of the Department and the Ratepayers and tell the Mayor and his budget team to buzz off?

(Jack Humphreville writes LA Watchdog for CityWatch. He is the President of the DWP Advocacy Committee and a member of the Greater Wilshire Neighborhood Council.  Humphreville is the publisher of the Recycler Classifieds -- www.recycler.com. He can be reached at:  lajack@gmail.com.)-cw

  • See also:

DWP Deserves ‘Free’ Rent at Fig Plaza

The Fig Plaza Stick Up: Ripping Off DWP Ratepayers for $40 Million

--Exposed! City Overcharging DWP Millions on Downtown Fig Plaza Rent

 

 

LA WATCHDOG--Many believe that California would be better off if we sent Attorney General Kamala Harris to Washington to succeed Barbara Boxer, the 75 year old “junior” senator from California.  But then again, is it fair to the rest of the country to stick the nation with the highly partisan Kamala Harris when Loretta Sanchez is the more qualified candidate? 

Kamala Harris’ fatal flaw is that she is a staunch opponent of pension reform.  

During the last two years, she has authored unfavorable and biased summaries for two bipartisan ballot measures that would have reformed California’s unsustainable pension plans.  Pension reform is the most important financial issue facing all levels of government as ever increasing pension contributions are required to cover the estimated unfunded liability of up to $500 billion. But these growing contributions are crowding out basic services such as public safety and the repair of our infrastructure as well as progressive initiatives involving education, affordable housing, and services to the homeless. 

This has resulted in numerous ballot measures for new taxes which, despite their stated use, are really going to fund the upside down pension plans.  

But rather than endorsing pension reform, Harris sold out to the campaign funding leadership of the public unions who are vehemently opposed to any reform of the very generous pension plans.  As a result, Harris has benefitted from significant cash contributions to her campaign war chest.   

Obviously, Harris did not get the memo from Rhode Island Governor Gina Raimondo that “you can’t be a progressive and be opposed to pension reform.” 

Ever since Harris was elected Attorney General in 2010, she has used her office as a stepping stone for higher office.  Over the years, she has been gallivanting around the country, spending hundreds of thousands of dollars on first class travel, five star hotels, and limousines and hitting up the usual out of state suspects for campaign donations. 

She has also used her office to reward her campaign contributors.   In 2015, Harris placed so many conditions on Prime Healthcare’s acquisition of the money losing hospitals owned by the Daughters of Charity that the buyer walked away from the transaction.  According to subsequent litigation, it was alleged that Harris was doing the bidding of the SEIU which was in a labor dispute with Prime Healthcare.  

No wonder the SEIU has been so generous to Harris’ campaign war chest.  

Harris has been so busy running around the country raising money and planning her next campaign that her office has suffered from the lack of organization and leadership and high turnover.  Her office has failed to implement or follow through on numerous initiatives such as gun control and criminal justice. But that has not stopped her from claiming credit for the work of others as was the case with the national mortgage settlement that was spearheaded by the Attorney Generals in New York and Delaware.  

Sanchez, on the other hand, has developed a reputation over her twenty years in House of Representatives as a legislator who can work in a bipartisan manner, much like Senator Diane Feinstein who has been an effective proponent for California. She has the endorsement of 17 of the State’s Democratic Congressional representatives, almost double the number that are supporting Harris.  

Sanchez also has a strong working knowledge of immigration, a very important issue to Californians, as she is the co-chair of the Immigration Task Force, a member of the Hispanic Caucus, and the daughter of hard working immigrants who achieved the American Dream. 

She has an excellent understanding of the water issues facing the State, having worked on matters involving conservation, groundwater, the Salton Sea, and other complex problems facing Orange County and Southern California. 

She is a ranking member of the House Armed Services Committee, but voted against the Iraq War, and the House Homeland Security Committee.  

Without doubt, Sanchez, an MBA and a financial analyst in the private sector before she upset B1 Bob Dornan in the 1996 election, is familiar with the federal budget, a complex issue that impacts all Californians. 

While Sanchez and Harris are both Democrats, we have the choice between Harris, a San Francisco ideologue who has derailed pension reform in return for union campaign cash, or Sanchez, a Southern Californian and a seasoned legislator with private sector experience who has demonstrated that she can work in a bipartisan manner to get things done. 

While Harris is leading in the polls, Sanchez has the unique opportunity to upset Harris by putting together a coalition of Hispanics, moderate Democrats, independents, and Republicans. 

Viva Sanchez.  

(Jack Humphreville writes LA Watchdog for CityWatch. He is the President of the DWP Advocacy Committee and a member of the Greater Wilshire Neighborhood Council.  Humphreville is the publisher of the Recycler Classifieds -- www.recycler.com. He can be reached at:  lajack@gmail.com.)

-cw

LA WATCHDOG--We need to send a loud and clear message to Mayor Eric Garcetti, the Herb Wesson led City Council, the County Board of Supervisors, the Los Angeles Community College District, the Los Angeles Unified School District, Governor Jerry Brown, and our representatives in Sacramento that we are not their ATM. 

LA WATCHDOG--Mayor Eric Garcetti and the Herb Wesson led City Council are using the homeless issue to pick our pockets for almost $2 billion over the next 30 years in an effort to cover up their abject failure to make this unfortunate situation a priority in the City’s budget over the last four years. 

If Proposition HHH (Homeless Reduction and Prevention, Housing, and Facilities Bond) is approved by two-thirds of the voters, the City will issue $1.2 billion of bonds over the next ten years.  These funds, along with billions from politically wired real estate developers and other governmental entities, will finance the construction of 10,000 units of permanent supportive housing for LA’s homeless population at a cost as high as $4 billion.  

LA WATCHDOG--In June, the Board of Commissioners of our Department of Water and Power postponed its consideration of a 10 year, $63 million lease of six floors of office space at Figueroa Plaza, a City owned office complex, because it did not pass the smell test.* 

Now, the Department is considering another ten year lease, but only for four floors at a cost of $41 million.  But once again, this deal is not ready for prime time as it is not in the best interests of the Department and the Ratepayers. 

The Department’s management makes the valid argument that its needs this additional space to house 700 employees who are needed to oversee the repair and maintenance of its water and power infrastructure, to modernize its IT and financial management systems, and to facilitate succession planning and the transfer of institutional knowledge as a third of its work force is eligible to retire over the next five years. 

But a ten year, $41 million lease is out of the question since DWP has not developed a long term plan to determine its real estate needs.  This space plan would include the reconfiguration of the John Ferraro Building, DWP’s 50 year old, 1.6 million square foot headquarters that is located across from the Music Center in DTLA. Interestingly, this idea was nixed during the City’s budget crisis by Mayor Villaraigosa and the Eric Garcetti led City Council.  

The “restacking” of JFB is estimated to be an expensive two or three year project if it were properly planned and managed by an experienced, independent contractor who would develop a floor by floor plan that would limit the disruption to the Department’s operations.  

There is also the concept of locating some of the Department’s noncore functions in less expensive real estate in parts of our City that would benefit from economic development. 

A well thought out and properly executed space plan would indicate that the Figueroa Plaza lease not exceed four or five years and that Department would need only three floors of “creative” office space.  This would imply that a five year lease (including parking) would be in the range of $12 million, not including tenant improvements of around $9 million that the City wants DWP to pay.  The total lease would be approximately $21 million, a significant discount to the new $41 million proposal. 

However, the City should consider cutting DWP and its Ratepayers a break given that we are forking over $291 million to fund the illegal 8% Transfer Tax on Power System revenues.  We are also being slammed with a five year $1 billion rate increase.  As such, the City should consider waiving the annual rent of about $2 million a year, leaving DWP to pay for the tenant improvements and parking.  DWP would be responsible for the $9 million tenant improvements that would stay with the building after the lease is over.  

The City will argue that it cannot afford the loss of revenue.  But given the vacancy factor of this out of the way location, its lack of amenities, its government dominated rent roll, the lack of interest by private sector renters, and the complex’s deferred maintenance, the likelihood of attracting tenants for these three floors is questionable. 

And maybe it is time for the City to give a little something back to the Ratepayers. 

 

●●

 

  • Previous CityWatch articles on the DWP lease of Figueroa Plaza 

--The Fig Plaza Stick Up: Ripping Off DWP Ratepayers for $40 Million

June 27, 2016 

--Exposed! City Overcharging DWP Millions on Downtown Fig Plaza Rent

June 20, 2016

 

(Jack Humphreville writes LA Watchdog for CityWatch. He is the President of the DWP Advocacy Committee and a member of the Greater Wilshire Neighborhood Council.  Humphreville is the publisher of the Recycler Classifieds -- www.recycler.com. He can be reached at:  lajack@gmail.com.)

-cw

 

LA WATCHDOG--In the 2013 Mayoral race, Candidate Eric Garcetti opposed Proposition A, the permanent half cent increase in our sales tax that would have raised our already regressive sales tax to a staggering 9½%, one of the highest rates in the country. 

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