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Thu, Oct

LA WATCHDOG--The reform and restructuring of the governance and operations of the our Department of Water and Power is intended to make our utility more nimble and efficient so that it is better able to address the increasing complex operational, organizational, technological, management, financial, and regulatory challenges it faces and will continue to face in a rapidly changing and increasingly complex environment.  At the same time, our engineering focused DWP must earn the trust, confidence, and respect of its 1.5 million Ratepayers by developing into a more customer centric and efficient enterprise.  

There are three areas of reform that have been discussed at multiple meetings throughout the City: 1) a more independent Board of Commissioners designed to limit the interference from the City Council and the Mayor, 2) improved contracting and procurement policies to eliminate overly burdensome overhead and layers of bureaucracy and red tape, and 3) the establishment of a DWP Human Resources Department for the Department’s 9,000 employees, separate and distinct from the City’s slow moving Personnel Department and City’s cumbersome civil service regulations. 

While there has been considerable discussion about the three areas of reform, there has been no meaningful discussion of the Transfer Fee/Tax because of the class action litigation alleging that this fee/tax is illegal because it violates Proposition 26 (the Supermajority Vote to Pass new Taxes and Fees) that was approved by California voters in 2010.  However, Councilmember Felipe Fuentes suggested that the Transfer Fee/Tax, which provided $267 million to the City’s coffers this year, be capped at its 2010 level of $221 million.  

On the other hand, a better idea would be to ask the voters to phase out the Transfer Fee/Tax over a 10 year period and waive the repayment of the $1.5 billion of illegal transfers made since 2011.  But to win over the voters, City Hall must be willing to reform its budget policies by agreeing to place on the ballot for our approval or rejection a charter amendment that will require the City to Live Within Its Means.** 

There also appears to an appetite by City Hall to hit up the Ratepayers to support other initiatives that are not part of the core mission of the Department. 

At Tuesday’s meeting of the City Council, Councilman Mitch O’Farrell, Chair of the Arts, Parks, and River Committee, proposed that DWP (read Ratepayers) subsidize the utility bill of the Department of Recreation and Parks to the tune of $20 million a year.  Mayor Garcetti also proposed to lower the rates for the Los Angeles Unified School District, DWP’s largest customer. 

While Recreation and Parks and LAUSD provide important public services, the Ratepayers should not be required to foot a portion of their utility bill.  This is not our responsibility.  Rather, these poorly managed government entities should feel the pain of the full impact of the recent $1 billion rate increase, just as we Ratepayers are forced to do. 

There are also others on the City Council and in the environmental community who are pushing the One Water agenda which would essentially put Ratepayers on the hook for financing a good chunk of the City’s $8 billion stormwater and urban runoff plan over the next 20 years.   This would deprive Angelenos of the right to approve or reject this massive project.   

There are others who want to expand the Department’s green agenda for the Power System without giving any consideration to the impact on the Ratepayers.  As it is, we are going to be hit with a $1 billion rate increase over the next 5 years plus another $150 million in new DWP related taxes.    

City Council President Herb Wesson has taken DWP reform under his wing, conducting a number of open meetings of the Rules Committee which he chairs.  He has also indicated that he intends to meet with labor and environmental groups, hopefully in open and transparent sessions where the public will be able to listen in and participate.  

We have yet to see any definitive ballot language.  This is disturbing since the ballot language needs to be determined within a month in order to be on the November ballot.  And as we all know, the devil is in the details, especially when it involves the politicians and their cronies who occupy City Hall. 

The reform and restructure of our Department of Water and Power will be a tough sell to the voters who do not trust or respect DWP and City Hall.  Rather than trying to do too much which will only complicate any ballot measure, the City Council and the Mayor (who has yet to come forward with any definitive thoughts) are strongly advised to follow the old KISS adage: Keep It Simple, Stupid.

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** The “Live Within Its Means” charter amendment, if approved by the voters, will require the City to develop and adhere to a Five Year Financial Plan; to pass two year balanced budgets based on Generally Accepted Accounting Principles; to benchmark the efficiency of its operations; to fully fund its pension plans within twenty years; to implement a twenty year plan to repair and maintain our streets, sidewalks, and the rest of our infrastructure; and to establish a fully funded Office of Transparency and Accountability to oversee the City’s finances and operations.

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(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--Our Mayor’s pet project is the revitalization of an 11 mile segment of the Los Angeles River, stretching from Griffith Park to Downtown Los Angeles.  And what is not to like about new open recreational space in the park poor City of Los Angeles other than the not so minor fact that our cash strapped City needs to pony up more than $1 billion over the next ten to twenty years to pay for its share of this $1.4 billion river revitalization project. 

This is considerably more than the $500 million that was originally advertised as our City’s share.  Unfortunately, a more detailed analysis showed the total cost ballooning from an estimated $1 billion to $1.4 billion at the same time that the US Army Corps of Engineers cut its contribution from $500 million to $200 to $300 million.

At this time, our City and its leaders do not have a plan to finance this the ambitious infrastructure project.  Rather, it is scrounging for money, financing bits and pieces from here and there.

For example, buried in the City’s 440 page budget, there is one mention – a line item - for the $60 million purchase of the Taylor Yard G2 parcel that is owned by the Union Pacific Railroad Company.  This river fronting, 40 acre rectangular parcel that lies between the River and the State’s Rio de Los Angeles Park in Cypress Park is considered vital to the rehabilitation of the River.

While this purchase will be financed with debt (and possibly with the proceeds of bond offerings or State grants), is this the best use of the City’s scarce financial resources or debt capacity?  Or should this money be used to finance the repair of our streets and sidewalks, the redo of Pershing Square, the expansion of the Convention Center, or housing for the homeless?

The City has also managed to convince the Metropolitan Transit Authority to set aside $425 million for a 51 mile bike path along the length of the River, from its headwaters in Canoga Park all the way to Long Beach.  But this $8 million a mile earmark for the Mayor’s pet project is over the top excessive, leading one to speculate how many other pet projects will be financed by Metro’s proposed half cent increase in our sales tax to 9½%.    

The City is also considering the establishment of an Enhanced Infrastructure Financing District (“EFID”) that will allow the City to skim off its portion of the increased tax revenues from a boat load of high end real estate developments that border the River and the surrounding communities, much like the old Community Redevelopment Agency that was viewed by many as a corrupt political organization. These EFID funds will then be reinvested in the local community, most likely for streets and transportation projects to serve the more densely populated area that is not served by mass transit. 

But these non-affordable developments are not subject to a long range plan that respects the existing communities and neighborhoods.  Rather, it is the Wild West, a land grab by rapacious real estate speculators. 

Before the City proceeds with the $60 purchase and problematic remediation of the 40 acre Taylor Yard G2 parcel from the Union Pacific, the Mayor and the City Council need to have an open and transparent conversation about whether this expenditure is the best use of our cash strapped City’s scarce resources. 

The City also needs to devote the resources to develop a well thought out, long range plan for the Los Angeles River.  This includes identifying the sources for over $1 billion in cash needed to complete this important initiative.  Most importantly, this plan must respect the surrounding communities who are well aware of the impacts of unplanned development throughout the City where campaign funding real estate speculators have successfully manipulated the Mayor and the members of the City Council.

 

(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 & POLL--More than likely, our Los Angeles Times will have a new owner as Gannett, the publisher of USA Today and the largest newspaper publisher in the country, has offered to buy Tribune, the owner of The Times and the Chicago Tribune, in an all cash deal for $15 a share, double the price of Tribune’s stock prior to the publication of Gannett’s initial offer of $12.25 a share on April 25.  

While Tribune’s newly installed, self-centered management and clueless directors may resist this very generous offer, most investors will be standing in line to sell their shares at this bonkers price.  At the same time, while Gannett is not an eleemosynary institution, our Los Angeles Times will be better off being free of Chicago based Tribune which has mismanaged The Times ever since Tribune acquired Times Mirror Corporation, the owner of our hometown paper, in 2000 for over $8 billion (including debt). 

It has been downhill ever since for The Times as the ivory tower know-it-alls from Chicago, armed with their MBAs and little else, dictated policy and cut costs, resulting in a LA Times that lost touch with Angelenos.  In 2007, the financial wizards that were running Tribune concocted a complicated leveraged buyout deal led by Sam Zell, a real estate magnate with a questionable reputation, which left Tribune with $13 billion in debt.  A year later, in December of 2008, an overleveraged Tribune filed for bankruptcy.  

Tribune emerged from a contentious bankruptcy in December of 2012, controlled by vulture capitalists whose wheeling and dealing resulted in the August of 2014 tax free spinoff of the Tribune Publishing, a newspaper company with dim prospects and almost $400 million in debt, from Tribune Media, a very profitable broadcasting company.  

At around the same time, Rupert Murdoch’s News Corporation and Gannett spun off their newspaper assets into publicly traded, debt free companies that were better able to transition from print publications to a more competitive digital world.  

About the only good news was that Tribune appointed Austin Beutner as Publisher of The Times in August of 2014.  His vision was local, to focus on the City, the County, and Southern California which included the synergistic acquisition of the San Diego Union Tribune.  But Beutner was canned in September of 2015 by Jack Griffin, Tribune’s power hungry CEO, who was unwilling to invest in local content or in developing a strong digital product. 

Beutner and other Angelenos made a run at returning The Times to local ownership, but they were rebuffed by Griffin and the Tribune Board of Directors. 

The LA Times needs a new owner, do you agree?
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In February, 2016, Jack Griffin and the Tribune sold 5.2 million shares to Michael Ferro, a Chicago internet entrepreneur, for $8.50 a share.  This $44 million investment resulted in Ferro owning 16% of the Company.  Less than three weeks later, he canned Jack Griffin and took control of Tribune.  

[Note: If Ferro sells his shares at $15, he will have a profit of $34 million, a return on investment of 75% in less than 6 months.] 

Since Ferro seized control of Tribune, he attended the Oscars, snagging tickets meant for the news staff, and blew the synergistic acquisitions of the Orange County Register and the Press Enterprise in Riverside because he was the smartest guy in the room and was unwilling to listen to experienced advisors who knew how to navigate the antitrust issues.  

This transaction makes sense for Gannett, even if it is a high price given the poor business outlook for the newspaper industry.  Gannett, a publisher of daily newspapers for the most part in small and midsized markets, will acquire the papers in LA and Chicago, two of the three largest markets in the country, as well as papers serving Orlando and Fort Lauderdale, Baltimore, and Hartford.  

We need strong local coverage, because without it, “we’re gonna have corruption at a level we never experienced,” according to Bob Schieffer, the trusted TV journalist who was the moderator of Face the Nation (CBS) for 23 years.  And we all know that we cannot trust City Hall whose occupiers and their cronies are more than willing to sell us out to the real estate speculators and developers and the leaders of the City’s unions.  

We need to make a deal with Gannett, that in return for subscribing to the paper and its web site and supporting its advertisers, it will provide us with strong local coverage.  This support may also involve setting up charitable entities to sponsor journalists covering the City and its proprietary departments (DWP, LAX, and the Port), the County, LAUSD, our failing infrastructure, and underfunded pension plans. 

We need a vibrant Los Angeles Times, one with an institutional memory, properly staffed with inquiring journalists who are willing to spend the time protecting our interests from predatory politicians who have no respect for our wallets.  At the same time, the Times needs our support and our money. 

While we may not agree with The Times on all issues, the paper has helped defeat ballot measures that would have nicked us for billions.  These include its opposition to Measure B, Mayor Villaraigosa’s 2009 solar plan that was a payback for IBEW Union Bo$$ d’Arcy’s generous campaign contributions, or the ill-conceived effort in 2013 to increase our sales tax by a half cent to a mind boggling 9½%. 

Put another way, a few bucks here and there for The Times will save us billions if the Mayor, City Hall, and the newly constituted Board of Supervisors were to have its way.

 

(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--At its meeting on Tuesday, May 3, the Los Angeles County Board of Supervisors instructed its Department of Parks and Recreation “to report back to the Board on June 21, 2016 with a final draft of the Park and Recreation Funding Measure so that the Board may consider its adoption and placement on the November 8 ballot.”  

But the likelihood of this proposed ballot measure that would raise between $200 and $300 million to fund the repair, operation, and creation of parks throughout the County being approved by the two-thirds of the voters is unlikely unless it undergoes major revisions.  And even then, it will a tough slog given all the competing tax measures that are expected to be on the November and March ballots. 

The Supervisors are considering a parcel tax of 3 to 5 cents on each of the 6.4 billion square feet of developed real estate in the County.  At 3 cents a square foot, this would produce revenues of almost $200 million a year for the Los Angeles County Regional Parks and Open Space District, a jump of 150% from the $80 million received in 2015.  This 3 cent levy would also increase based on the Consumer Price Index while the total haul would benefit from the growth in the developed real estate.

Over the 35 year life of this tax, the total revenue is projected to be in excess of $15 billion. 

But slamming the taxpayers with a 150% increase in the parks parcel tax is not going to be very popular with the voting public.  

One alternative would be to have the County put its money where its mouth is as the Supervisors have been very eloquent about the vital importance of parks and open space.  This plan will involve a hefty 25% bump in the parcel tax from $80 million to $100 million (1.5 cents per square foot or $42 for each of the 2.4 million parcels) accompanied by an annual $100 million contribution from the County’s $22 billion General Fund to its Regional Parks and Open Space District.  At the same time, the County will also be required to allocate adequate resources to its Department of Parks and Recreation. 

Another hot button issue is the allocation of this pot of gold by the Supervisors.  According to the carefully orchestrated Needs Assessment Report, a disproportionate amount of the money will be directed to “under parked’ urban areas of the County.  However, this will result in pushback from suburban voters and open space advocates who believe they will not be getting their fair share.  This may result in many voters rejecting this ballot measure. 

As such, the Supervisors will need to disclose the allocation of funds in the ballot measure that balances the goals of urban dwellers, suburban taxpayers, and open space advocates.  

The Supervisors will also need to provide independent oversight of the Regional Park and Open Space District and the Department of Parks and Recreation by establishing a Citizens Oversight Advisory Board that has the resources to conduct an objective, critical, and constructive review and analysis of the operations, finances, and management of these two entities.  This is critically important now that the fiscally prudent Zev Yaroslavsky and Gloria Molina have been replaced by two Supervisors not necessary known to be respectful of our wallets.   

This ballot measure already starts out with one strike against it as two-thirds of the voters did not approve Proposition P, a modest $50 million parks parcel tax to replace an expiring parcel tax, in November of 2014.  

This ballot measure has also received a second strike from “voter fatigue” as our tolerance will be exhausted by City and County tax initiatives totaling $1.8 billion over the next year or two. Think Metro, Stormwater, Homelessness (both City and County), Streets and Sidewalks, DWP, and Parks.  And this not include any new State taxes.  

These assaults on our wallets are the equivalent of a 37% hike in our real estate taxes or a three cent bump in our sales tax to 12%. 

If the Supervisors decide to proceed with this Parks Parcel Tax, it must be carefully orchestrated where the County limits the impact on property owners and steps up to the plate and contributes 50% of the needed funds.  At the same time, the City and the County will need to disclose their long term plans to increase our taxes and demonstrate that they are using our money efficiently and in our best interests.  

Otherwise, it’s three strikes and you’re out, game over for not only the Parks Parcel Tax, but for Metro’s proposed half cent increase in our sales tax that will cost us $120 billion over the next 40 years.

(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--While the combined budgets for the City Council and the Mayor are projected to be $100 million next year, will Paul Krekorian, the Chair of the City Council’s Budget and Finance Committee, conduct an open and transparent discussion of the individual line items of each budget so that Angelenos will have a better understanding as to how and where their money is being spent? 

For example, there has not been an open and transparent discussion about the Councilmembers’ discretionary funds that are reputed to haul in over $20 million a year, money that could be used to repair our streets or fund a portion of the City’s homeless initiative.  

Sources of cash for these slush funds include the Street Furniture Fund (advertising revenues from bus shelters), Oil Pipeline Franchise Fees, the Real Property Trust Fund (50% of the sale of surplus property in a Council District), and AB 1290 Funds (tax increment funds associated with the dissolution of the corrupt Community Redevelopment Agency).  There are also fees from Lopez Canyon Landfill, Sunshine Canyon Landfill, and the Central LA Recycling and Transfer Station that never see the light of day. 

Where the discretionary cash goes is also not very transparent unless you are willing to hire a team of forensic accountants.  Reportedly, Councilmembers use a portion of these slush funds to fund members of their bloated staffs. 

There are discrepancies between the number of positions listed in the budget for the Mayor (94) and the City Council (108) and internal rosters, telephone directories, and web sites which indicate over 450 employees.  Naturally, this gives rise to the question of how are all these staffers being paid and what is the source of the cash to fund the extra salaries, pensions, and benefits.  

This headcount does not include numerous City employees who are on “loan” to the Mayor’s office to work on special projects and initiatives or the many employees throughout the City who are on call to answer the many time consuming inquiries from the offices of the Mayor and the Councilmembers. 

The Mayor’s budget also includes a line item of $36 million for Non-Departmental Allocations that comprises two-thirds of his $54 million fully loaded budget.  But there are no details about how and where this money will be spent in the over 1,700 pages covering the budget.  

Nor is there any information about how last year’s $38 million of Non-Departmental Allocations was disbursed.  

The City Council has also budgeted $6 million for Non-Departmental Allocations.  While this represents only an eighth of its $47 million budget, again there is no information on where this cash is going.  

Tellingly, the budgets for the City Council and the Mayor were the only departments that did not have the Supporting Data that outlines the distribution of 2016-17 total cost of their programs.  This includes pensions and human resource benefits (equal 30% of total salaries for the combined departments) and other departmental expenses.  

The unwillingness of the Budget and Finance Committee to demand transparency from the Mayor and its own City Council is justification as to why the City should implement the recommendation of the LA 2020 Commission to establish an independent Office of Transparency and Accountability to oversee the finances of our cash strapped City, whose elected officials appear to be allergic to the sunshine demanded by skeptical Angelenos. 

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The Budget and Finance Committee should also consider another recommendation of the LA 2020 Commission by creating a Committee on Retirement Security to review and analyze the City’s two underfunded pension plans, especially in light of the projected $101 million deficit in 2020 caused by an increase of over $180 million in pension contributions, wiping out the $68 million surplus that was projected last year. 

 

(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

 

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