Will Bay Area political crowd trump LA yet again?

Gavin newsomIt’s been a fait accompli that Gavin Newsom, the former San Francisco mayor and current lieutenant governor, will be California’s next governor after the iconic Jerry Brown heads off into the sunset next year. Moonbeam is a hard act to follow, having served as the state’s youngest and oldest chief executive, but it’s too bad California can’t at least muster a feisty and contentious political debate before crowning another Bay Area pol as successor.

You know, where politicians actually debate issues, take varying political stances and give voters a choice rather than a coronation.

It’s hard to understand Southern California’s inability to exert much clout at the highest levels of California government. Brown is from Oakland. U.S. Sen. Kamala Harris, the former state attorney general who got here start under the tutelage of former San Francisco Mayor Willie Brown, already is touted as the inevitable Democratic nominee for president.

Los Angeles Mayor Eric Garcetti, whose slim accomplishments certainly are on par with those of Harris, is mostly garnering skepticism for his possible presidential run. Sen. Dianne Feinstein is from Marin County and Senate President Pro Tempore Kevin de Leon is, of course, from Los Angeles, but he’s too busy dealing with an unfolding sexual-harassment scandal in his own chamber to have the time for a serious shot at her U.S. Senate seat.

De Leon and the low-key Assembly Speaker Anthony Rendon, D-Paramount, have the top legislative spots, but they’ve mostly rubberstamped the governor’s priorities. No one would suggest that either man is a true power broker – or is on the fast track to the governor’s mansion or the U.S. Capitol. There’s little doubt that Southern California politicians play second fiddle to their Bay Area counterparts and don’t even put up a fuss about it.

They rarely set an agenda that’s distinct from the one set by their Bay Area betters, so perhaps that explains why a region with so many people can’t seem to keep up with the power of an area that’s far less populous. San Francisco Democrats and Los Angeles ones are both progressive – but their priorities should not be interchangeable. The demographics and economies are vastly different between the state’s two megalopolises.

The latest Public Policy Institute of California poll offers some mixed news for Southlanders. For instance, Newsom’s latest lead is far lower than expected. He is favored by 23 percent of surveyed voters, with former Los Angeles Mayor Antonio Villaraigosa, also a Democrat, coming in a surprisingly close second at 18 percent. The other contenders, including the two lackluster Republicans (John Cox and Travis Allen), are in single digits. With the top-two primary system, the top two vote-getters face off in the general election even if they are from the same party.

In the Senate race, Feinstein is besting de Leon by a two-to-one margin, and around half of the voters surveyed had never even heard of de Leon, which is perfectly understandable given his underwhelming tenure in the Capitol. De Leon did throw a really cool $50,000 party at the Walt Disney Concert Hall in 2014 to celebrate his inauguration as Senate president pro tempore, but apparently the “glitz-fest,” as the Sacramento Bee called it, didn’t help any lasting name identification.

On the surface, Villaraigosa’s competitiveness in the gubernatorial race does offer hope that a Southern California politician could once again lead the state. But don’t get your hopes up. He admirably has taken on the teachers’ unions to advance school reform, but he also touched the third rail of politics, when he called for “changes” to 1978’s property-tax-limiting Proposition 13. Instituting a “split roll,” for instance, would dramatically increase the tax bill paid by commercial property owners.

This is more than a policy problem. Villaraigosa’s path to the governor’s mansion involves rallying Southern Californians, Latinos and remaining conservative and Republican-oriented voters. The latter comprise a falling 26 percent of voters, but it’s a significant enough block to create a path to victory. But attacking Prop. 13 tax protection is a nonstarter for that group.

Last November, former Orange County Congresswoman Loretta Sanchez seemed to embrace a similar political strategy (Latinos, mod Dems, Southern Californians, Republicans) to take on Harris for the U.S. Senate race, but despite her more moderate positions, her Latina background and SoCal credentials, Sanchez could only muster 38 percent of the vote. Unless, Villaraigosa expands his appeal, he is likely to face a similar fate.

“It looks just like the Harris race that it’s preordained that the candidate from the Bay Area will get the position rather than a qualified Latino candidate from Southern California,” said Alan Clayton, a San Gabriel Valley-based redistricting expert. “The political class in California protects its own, and they are significantly from the Bay Area.”

For Southern Californians to have a greater voice in Sacramento and Washington, D.C., Southern California Democrats have to speak with a more regional voice – one that focuses on public-sector reform, fiscal responsibility and on working-class concerns (jobs, housing, etc.) rather than the often-bizarre fixations of San Francisco liberals. Until then, expect a county that’s more populous than 40 other states to remain the lapdog to the Bay Area political establishment.

Steven Greenhut is a Sacramento-based writer. 

This article was originally published by Fox and Hounds Daily

The Delusion of Eric Garcetti for President

Photo courtesy of Eric Garcetti, Flickr.

Someone may be putting something in the Los Angeles water supply. In the past months, two unlikely L.A.-based presidential contenders — Mayor Eric Garcetti and Disney Chief Robert Iger — have been floated in the media, including in the New York Times.

But before we start worrying about how an L.A.-based president might affect traffic (after all this is the big issue in Southern California), we might want to confront political reality. In both cases, the case for our local heroes’ candidacies is weak at best, and delusional at worst.

The Disney fantasies

The Iger case is, if anything easier to dismiss. Iger can sell himself, like Trump, as a business success story, and with probably far-fewer questionable business transactions. Yet Iger, trying to run as a progressive in an increasingly left-wing Democratic Party, will face numerous challenges that dwarfs those faced by Trump.

Iger, for example, will have to run against the sad record of his company’s self-serving interference in Anaheim. Disney is generally a low-wage employer, and, in Orange County, this can be seen as contributing to the enormous disparity between cost of living and low salaries. I don’t suggest that companies should be primarily social justice warriors, but when a corporate executive runs, he’s going to be subject to their scrutiny.

Other problems also abound. For example, in 2016 the firm laid off 250 of its Orlando tech employees, replacing them with H-1B visas holders from an Indian outsourcing firm, and then, insisted that some train their replacements before being laid off. Let’s just say that won’t play well if Iger had to run against populists like Bernie Sanders, Elizabeth Warren, or even Joe Biden.

Should mayors run the world?

If Iger suffers from Mouse made illusions, Garcetti gets his from urbanist circles, who increasingly maintain that mayors should run the world. This may seem strange given that core cities account for barely a quarter of our major metropolitan population. In the Los Angeles metropolitan area, most of regional growth takes place well outside the urban core. The slow growing city, which was first claimed to have reached four million people in 2008, has still not achieved that number according to the U.S. Census Bureau.

Unfortunately for Garcetti, L.A. makes a hard sell as an exemplar for the economic future. Some cities like New York and San Francisco, have enjoyed robust expansions of employment in the past decade, but not Los Angeles. Overall, notes a recent survey in Wallet Hub of 150 cities in the country in terms of job prospects, ranked Los Angeles 115th well below less hyped places as Irvine, Rancho Cucamonga, Ontario and even Fontana.

Garcetti’s has tried to sell L.A.’s “silicon beach” as a hot tech location but, despite the success around the now faltering Snapchat, overall STEM growth over the past decade has been slightly negative. Remarkably for a one-time tech behemoth, the county now has less STEM employment per capita than the national average. At the same time, rankings of inequality and poverty, as measured by urban theorist Richard Florida, place the L.A. area, which includes the surrounding communities, dead last among the 20 largest metros. Overall the poverty rate in both the city proper and in the riot zone is higher now than before the 1992 riots.

Has Garcetti’s density agenda paid off elsewhere? One in four Angelinos, according to a recent UCLA study, spend half their income on rent, the highest again of any major metro.

Garcetti’s backers praise pro-density policies and hail him as a crusader against sprawl. But ordinary citizens are less enthused about his policies for narrowing streets, which has not only slowed traffic but also seen an increase in accidents; congested traffic also tends to generate more greenhouse gas. Garcetti gets kudos for his transit fixation but last year Los Angeles accounted for almost one-quarter of the strong national decline in transit ridership; in the period spanning his first term, Los Angeles lost 113 million annual rides, 16.6 percent of its 2014 ridership.

Deep blue visions on the national stage.

Of course, Mayor Garcetti is not to blame for all L.A.’s troubles, which have been festering for decades. His culpability lies with doubling down on failed policies. If someone is running for the highest office in the land, it’s nice to have something to brag about other than speculative high rises in the inner core and the arrival of two football teams, both scheduled to play in Inglewood.

The good news may be neither of these people are going anywhere. Both Garcetti and Iger seem unlikely to outdo California’s favorite daughter, Sen. Kamala Harris, in the early primaries. She may have little to show for her time in office — except for a genius for grandstanding — but her multi-cultural allure, to coin a phrase, trumps that of white male heterosexuals in today’s identity crazed Democratic Party.

Basically, my old New Yorker’s advice to both these guys is: “fuggedaboutit.” America may be nutty enough to nominate a Californian, but it won’t be either of you.

Originally published in the Orange County Register.

Cross-posted at New Geography.

Does Eric Garcetti – like Kamala Harris – have an eye on the White House?

Photo courtesy of Eric Garcetti, Flickr.

California Sen. Kamala Harris’ splashy first year in Washington has made her a fixture on lists of potential 2020 Democratic presidential candidates – and not as an interesting long shot but as someone with a strong chance.

While the California Legislature’s recent vote to move the state’s 2020 presidential primary from June to March was seen in the Golden State as yet another attempt to make America’s most populous, richest state more of a factor in deciding the presidential nomination, a Newsweekanalysis last month saw it as an attempt to boost Harris’ potential White House bid. The Newsweek headline: “Is Kamala Harris Now the 2020 Favorite to Take on Trump?”

In 2016, California had 548 delegates at the Democratic Convention – nearly one-quarter of the 2,382 needed for the nomination that year. The numbers are likely to be similar in 2020, potentially giving Harris a big boost in the nomination race after voting in Iowa, New Hampshire and a handful of other states possibly more inclined to back more familiar Democrats such as former Vice President Joe Biden, Vermont Sen. Bernie Sanders or Massachusetts Sen. Elizabeth Warren.

But there appears to be a fair chance that the assumption Harris would be the clear choice in the Golden State faces a huge complication: the presence of another popular, fresh California politician in the Democratic nomination mix.

Los Angeles Mayor Eric Garcetti has hinted that he’s thinking about running for governor in 2018 as well as president in 2020. After his recent appearance at the Sacramento Press Club, a Los Angeles Times account said his coy responses to questions about his political future “did little to dampen what has become a rowdy parlor game among California politicos: speculating on just what Garcetti will do next.”

The idea that Los Angeles residents might be upset about a Garcetti presidential bid because it would take him away from his duties as mayor is undercut by a Loyola Marymount poll released last month. It showed 63 percent of the 914 Los Angeles County residents surveyed were “strongly supportive” or “somewhat supportive” of Garcetti seeking the White House.

A Politico analysis in May offered a look at why a Garcetti bid intrigues some in the upper ranks of the Democratic establishment. It described him as a handsome 46-year-old who “was just re-elected to a second term with 81 percent of the vote, and is half-Mexican (he speaks Spanish fluently) and half-Jewish (he’s an active member of a very progressive L.A. synagogue), a Rhodes scholar and former Navy intelligence reserve officer.”

Harris, who turned 53 Friday, also has an attractive personal story in a Democratic Party on the lookout for candidates who can inspire large turnouts among young and minority voters. She has a Jamaican-American father and Indian-American mother and has been a trailblazer throughout her political career.

Both have records with fodder for attack ads

But if either Garcetti or Harris seek the White House, rival Democrats will have no shortage of fodder for attack ads.

Garcetti was first elected mayor in 2013 and cruised to re-election earlier this year, facing no serious opposition. He is considered hard-working and an impressive policy wonk.

But Los Angeles has emerged as the epicenter of American poverty in recent years thanks to high housing costs and the departure of Fortune 500 firms and mid-sized businesses alike. A 2014 blue-ribbon report commissioned by the City Council depicted Los Angeles as “facing economic decline, weighed down by poverty, strangled by traffic and suffering from a crisis of leadership,” according to a Los Angeles Times account. Garcetti has not reversed this downward arc, leading to a Los Angeles magazine article in August lamenting how Silicon Valley had far eclipsed the Los Angeles region.

As for Harris, her record during six years as attorney general was more mixed than some national coverage assumes – and at times at odds with now-ascendant Bernie Sanders-style populism. While she achieved high-profile wins in going after corporate malfeasance  – starting with shady mortgage lenders  – she was not a leader in criminal-justice reform in an era in which the movement built up momentum in California with dramatic changes in sentencing and parole laws. Some editorial writers challenged her description of herself as a “bold leader.” Jacobin magazine, which has a devoted following among progressives, was much harsher, depicting her as having “two faces” on crime and siding with reactionary tough-on-crime policies repeatedly while attorney general. Other liberal voices strongly agree, as the New Republic reported in August.

As California AG, Harris also continued a long bipartisan tradition that appalls good-government advocates: writing slanted descriptions of ballot measures that are meant to help or hurt the proposals. In 2015, for example, the liberal San Francisco Chronicle editorial page blasted Harris for ballot language that effectively killed a pension reform campaign in its infancy.

This article was originally published by CalWatchdog.com

L.A.’s Unfunded Pension Liability Explodes to $15 Billion. Leadership Nowhere To Be Found

Photo courtesy of channone, flickr

Photo courtesy of channone, flickr

LA WATCHDOG — Our enlightened elite who occupy Los Angeles City Hall tell us that pension reform is not necessary. After all, the recent actuarial report for the Fire and Police Pension Plan indicated that its $19 billion retirement plan was 94% funded as of June 30, 2016.

But as we all know, figures never lie, but liars figure, especially when it involves the finances of the city of Los Angeles.

The city will say that a pension plan that has assets equal to 80% of its future pension obligations is in good shape.  Baloney! Pension plans should aim to be 100% funded, especially in down markets. And in today’s bull market, where the Dow Jones Industrial Average is hitting record highs, the pension plan should be 120% funded so that it can withstand another bear market.

Even at the 94% funded ratio, the unfunded pension liability for the retirement plan is pushing $1.2 billion, not exactly chump change when compared to the projected payroll of $1.4 billion for the 12,800 active cops and firefighters.

But there is more bad news that is buried in the opaque actuarial reports that, when pieced together and analyzed, reveals that the overall Fire and Police Pension Plan is over $6 billion in the red and that only 75% of its future obligations are funded.

The Fire and Police Pension Plans are also responsible for Other Post-employment Benefits (“OPEB”) which covers medical benefits for retirees. But the $3 billion of OPEB obligations are less than 50% funded, resulting in an additional $1.6 billion in unfunded liabilities.

The city is also cooking the books by “smoothing” the actual gains and losses in its investment portfolio over a seven year period. This little trick is covering up a $600 million hit to its investment portfolio.

Finally, if the newly calculated liability (that includes adjustments for OPEB and smoothing) of $3.4 billion (85% funded) is adjusted to reflect the more realistic investment rate assumption of 6.5% (as recommended by Warren Buffett), the unfunded pension liability soars to $6.25 billion and the funded ratio plummets to 75%.

When combined with the $9 billion liability of the Los Angeles Employees’ Retirement System, the city’s total unfunded pension liability exceeds $15 billion. And this liability is expected to double over the next ten years based on realistic rates of return that are in the range of 6% to 6.5%.

But what are Mayor Eric Garcetti, City Council President Herb Wesson, Budget and Finance Chair Paul Krekorian, and Personnel Chair Paul Koretz doing to address the single most important financial issue facing the city?

Nothing! Absolutely nothing other than put their heads in a potato sack and hope that a robust stock market will make the $15 billion problem go away.

They have ignored the recommendations of the LA 2020 Commission to form a Committee on Retirement Security to review and analyze the city’s two pension plans and develop proposals to “achieve equilibrium on retirement costs by 2020.”

Krekorian and Koretz made the bone headed suggestion to raise the investment rate assumption to 8% so that the city would be able to lower its annual required pension contributions to the underfunded pension plans, allowing more money for union raises.

Wesson has not even created a Council File for the pension and budget recommendations of the LA 2020 Commission.

But the real culprit is Garcetti who has refused to address the pension mess that will eventually become a crisis. He has not asked his political appointees on the two pension boards to initiate a study of the pension plans and the city’s ever increasing contributions that now devour 20% of the city’s General Fund budget.  He has refused to contest the State’s Supreme Court “California Rule” which does not allow the city to reform the pension plans by lowering future, yet to be earned benefits.

Rather than look out for the best interests of the city and all Angelenos, he continues to kiss the rings of the campaign funding union leaders who are vital to his political ambitions.

The city’s lack of openness and transparency and its unwillingness to address its ever growing, unsustainable $15 billion pension liability can only be categorized as a major league cover up that should be front and center in the upcoming March election.

Where’s Eric?

Jack Humphreville writes LA Watchdog for CityWatch. He is the President of the DWP Advocacy Committee and is the Budget and DWP representative for the Greater Wilshire Neighborhood Council.  He is a Neighborhood Council Budget Advocate.  Jack is affiliated with Recycler Classifieds — www.recycler.com.  He can be reached at:  lajack@gmail.com.

This piece was originally published by CityWatchLA

‘Sanctuary California’ Faces Bankruptcy if Trump Withholds Federal Funds

california empty pocketsAlthough Los Angeles Mayor Eric Garcetti warned President-elect Trump that defunding sanctuary cities would cause “social, economic and security problems,” Sanctuary California could face bankruptcy if the Trump administration follows through on threats to pull billions in federal funding.

There are 300 “sanctuary cities” and counties around the United States that have policies in place blocking local law enforcement from complying with U.S. Immigration and Customs Enforcement detainer requests for immigration holds.

An ICE detainer is a written request for a local jail or other law enforcement agency to detain an individual for an additional 48 hours (excluding weekends and holidays) after his or her release date, in order to provide ICE agents extra time to decide whether to take the individual into federal custody for removal purposes.

The Department of Justice’s Inspector General issued a memorandum in August that advised that sanctuary city practices violate federal law. The IG finding empowers Sen. Jeff Sessions (R-AL), if confirmed as U.S. Attorney General, to strip sanctuary cities — including New York, Los Angeles, Chicago and Washington, D.C. — of certain federal law enforcement grants. He can also seek court orders to strip federal grants from any government entities refusing to comply with U.S. laws.

Sessions applauded the finding: “Now, the law and the American people demand that this administration cease its acquiescence in this illegality. The Obama administration must immediately take action to withhold significant federal law enforcement funding for these offending jurisdictions.”

Mayor Garcetti and other big city Democrat mayors have defiantly said after Trump’s election that despite the federal government providing an average of 25 percent of state and local government general revenues, they still will not comply with ICE holds.

The reason local government can afford to flout the incoming Trump administration without much fear,is that 95 percent of the $620 billion in federal intergovernmental transfers are block-granted directly to states, who then make transfers to their cities and counties. Direct federal block grants to local government amount to only about $30 billion, and half of that is untouchable as public health and Homeland Security funds.

But there are four Democrat-controlled “Sanctuary States” that are also defying federal law by refusing to honor ICE detainer requests for immigration holds. Connecticut, New Mexico, and Colorado receive relatively small amounts of federal dollars due to low population. But the State of California, with the largest population, is the top receiver of federal funds in the nation.

Of California’s $252.5 billion in total estimated government spending for fiscal year 2015, the federal government provided $93.6 billion, or 37 percent. That works out to a stunning $6,451 for every man, woman and child in the state.

The breakdown of California’s federal funding, by department, includes: 52 percent for Health and Human Services (Medicaid); an average of 25 percent of all state and local government’ general revenues for Labor and Workforce Development, 14 percent for Education; 6 percent for Transportation; 2 percent for Legislative, Judicial and Executive; and 1 percent for General Government, which includes Natural Resources, Environmental Protection, Corrections and Rehabilitation, State and Consumer Services.

Breitbart News reported in May that Moody’s Global Credit Research fiscal stress-tests found that California was already the least prepared large state to weather the next recession. The credit rating service followed up in August with a warning to municipal bondholders that the plummeting financial condition of many California counties, cities, school districts and other agencies would soon result in large numbers of municipal bankruptcy filings.

The only time in the last 40 years California that suffered a 3.7 percent or more of GDP decline was the 4.4 percent plunge in 2009 during the Great Recession. Given the state’s precarious financial condition, any cut-off of federal funds by the Trump Administration could bankrupt California and many of the state’s local government entities.

This piece was originally published by Breitbart.com/California

Why Los Angeles Urban Planners Are Wrong to Restrict Parking

ParkingJust before the backers of the anti-development Neighborhood Integrity Initiative submitted more than enough signatures to put the measure before the voters, they met with L.A. Mayor Eric Garcetti.

If the city would come up with its own plan to limit oversized developments, the group said, they would not go forward with the initiative.

Mayor Garcetti made a concession. He offered to notify the public of closed-door meetings between city officials and developers.

That wasn’t nearly enough for the initiative backers, who think closed-door meetings should be banned altogether, and it’s hard to argue with that.

Demolition of the buildings on the historic former Rocketdyne site in Canoga Park is now underway in preparation for what the developer is calling a “sustainable urban village” of about 4,000 housing units. As recently as June, City Councilmember Bob Blumenfield addressed public concerns about an excessively large development at the site by saying, “nothing has been submitted to the city for this location.”

Has Councilmember Blumenfield or other city officials held closed-door meetings with the developer or lobbyists and consultants about the Rocketdyne site? The public lacks even the right to know.

The Neighborhood Integrity Initiative is aimed at stopping the out-of-control “spot zoning” that allows oversized developments to be approved in places where they otherwise would be prohibited.

One purpose of zoning and community plans is to provide consistency over time, so that when people buy property, whether for a home or business, they know what they’re buying. A home on a quiet street of single-family residences won’t suddenly have a strip mall or hotel as a next-door neighbor.

“Spot zoning” to allow more height and density can have an extremely negative impact on the surrounding neighborhoods, especially if the minimum requirements for parking are waived. And this is increasingly what some urban planners are recommending.

Donald Shoup, a professor of urban planning at UCLA and author of the influential 2005 book, “The High Cost of Free Parking,” says “minimum parking requirements subsidize cars, increase traffic congestion and carbon emissions, pollute the air and water, encourage sprawl, raise housing costs, exclude poor people, degrade urban design, reduce walkability and damage the economy.”

But eliminating minimum parking requirements risks turning neighboring residential streets into a scene that resembles the parking lot of Dodger Stadium when the Giants are in town.

Housing policy in California has discouraged the development of new single-family houses in outlying areas in favor of what planners call “infill,” the construction of high-density housing on vacant land in built-up areas. State law also speeds approval of “transit-oriented development,” mega-projects located within a half-mile of a train station or a bus stop with frequent service during peak hours.

Urban planners have a vision that …

Click here to read the full story from the Daily News

A Full Plate of Higher Taxes Awaits L.A. Voters

Photo courtesy of channone, flickr

Photo courtesy of channone, flickr

Thanksgiving falls on Nov. 24 this year, but for politicians in Los Angeles, turkey day is Tuesday, Nov. 8.

That’s when they will attempt to carve up taxpayers with at least four proposed tax increases – a sales tax hike and three measures that would increase property taxes.

It’s no coincidence that these tax-hike proposals are all on the ballot this year. Political experts believe tax increases have a better chance of passing in presidential elections, when turnout is higher.

So California politicians have been studying the polls and the calendar, and they’ve all reached the same conclusion — it’s fine weather for soaking taxpayers.

This comes on top of the Los Angeles Department of Water and Power’s five-year rate hikes, recently approved by Mayor Eric Garcetti and the L.A. City Council, which will fund a “city transfer” of hundreds of millions of ratepayer dollars to the city treasury every year.

If you think that’s sneaky, wait until you see the surprises in the latest proposed tax increases.

The Los Angeles Metropolitan Transportation Authority wants a permanent sales tax increase of one-half of one percent, plus a permanent extension of the 30-year Measure R sales tax passed in 2008. If voters say yes, Metro will have upwards of $120 billion to plan and build transit projects that are described in a detailed countywide plan.

But, surprise! The detailed plan can be completely changed at any time with a two-thirds vote of Metro’s board of directors. Nothing is guaranteed except a permanent tax increase.

And there’s another surprise. Under state law, this “traffic improvement plan,” as Metro has named it, will trigger super-streamlined approval for massive blocks of apartments within one-half mile of planned “major transit stops.” Transit-oriented developments don’t require studies of the projects’ impact on traffic speed or neighborhood parking. Instead of reducing traffic, we’re guaranteed to get high-density development that jams the streets decades before the transit is ever built.

Another proposed tax increase that’s full of surprises is a Los Angeles city bond to pay for housing for the homeless.

If the voters say yes, the city will be authorized to borrow $1.2 billion dollars and then pay it back by adding a new tax to property tax bills.

The city’s legal experts say the bond money couldn’t be used to pay for supportive services like mental health and substance abuse treatment, but only to buy land and build housing. The city would be allowed to use its powers of eminent domain to acquire land throughout Los Angeles, and then the land could be leased at a low cost to the developers who win the contracts to build homeless housing. …

Click here to read the full article at the L.A. Daily News

L.A. Needs Jobs, Not Tax Hikes, to Fight Poverty, Homelessness

 

homelessIn 2007, about a year before the economy crashed, the Gallup Poll found that 28 percent of Americans had at some point worried about becoming homeless.

It’s worse today. A new UCLA study found 31 percent of county residents worried about becoming homeless. Even among people earning between $90,000 and $120,000, 1 in 4 were afraid they would one day live on the street.

The fear is a symptom of a stagnant economy. If people felt confident that they would always be able to find a job, some kind of job to pay the bills, everybody would be sleeping better at night. Instead, there is widespread anxiety that unemployment could be imminent, devastating and at an ever-younger age, permanent.

When economic stagnation is the problem, a tax increase is not the solution. Higher taxes drain away resources needed for growth and job creation. Beleaguered businesses shrink, close or leave. Poverty spreads like water on a marble floor.

So it’s particularly depressing to see the city and county of Los Angeles plotting to raise taxes in the name of helping the homeless.

Mayor Eric Garcetti’s proposed $8.75 billion budget includes a pledge of $138 million to help get homeless people into affordable housing, but the future of Garcetti’s 10-year, $2 billion plan to house the homeless depends on persuading voters to approve a higher sales tax, more borrowing, or a new transfer tax on real estate transactions. None of those proposals reached 50 percent approval in a recent poll conducted for the city. They’d need a two-thirds vote to pass.

L.A. County’s proposed budget would spend $100 million to help the homeless, about one-fifth of what county officials say is needed. A poll on how to pay for it found 76 percent support for a half-percent tax increase on income over $1 million, about 67 percent support for a half-percent increase in the sales tax or a 15 percent sales tax on marijuana, and 47 percent approval for a $49 parcel tax added to property tax bills.

But can the problem of homelessness be solved with higher taxes?

There is reason to doubt it.

The Skid Row Housing Trust recently opened an affordable housing development to serve homeless veterans. “The Six” provides 52 units of permanent supportive housing, but it cost $16.7 million, about $321,000 per unit.

The Los Angeles Homeless Services Authority says 46,874 people in L.A. County are without a roof over their heads. To house each of them in a place like “The Six” would cost $15 billion.

Suppose we paid it. Would Los Angeles then be free of homeless encampments? Would the sidewalks be clear for pedestrians? Would red lights be just red lights, and not a 30-second Dickens novel?

Not likely, thanks to the federal courts.

In 2003, the American Civil Liberties Union sued the city of Los Angeles over enforcement of a section of the city code that allowed police to arrest people for sleeping on the street. The city lost. The Ninth U.S. Circuit Court of Appeals said the Constitution “prohibits the city from punishing involuntary sitting, lying or sleeping on public sidewalks that is an unavoidable consequence of being human and homeless without shelter in the City of Los Angeles.”

The courts have also protected panhandling, calling it a First Amendment right. Last year, cities in Maine and Illinois were told they could not ban panhandling on the medians at intersections or in a busy downtown area.

So Los Angeles taxpayers could spend twice the city’s annual budget on housing the homeless and still have no legal way to stop a new wave of people from replacing them on the streets.

Homelessness is not one problem and it doesn’t have one solution, unless you’re a politician searching through polling data for a way to get voters to support another tax increase. Nobody likes homeless encampments? Bingo!

What’s needed in Los Angeles is a comprehensive effort to improve the business climate so people can find good jobs or run small businesses profitably. Every government policy that burdens businesses or consumers with higher costs reduces hiring, deepens poverty and puts more people at risk of living in vehicles, shelters or tents.

Sadly, our elected officials think of businesses not as engines of economic well-being, but as cash registers to be robbed by government do-gooders. They would rather have their picture taken in a homeless shelter than get out of the way and let people earn a living.

That should keep everybody up at night.

To reform DWP, L.A. should learn from other cities

DWPThe Los Angeles City Council is preparing to vote on new water and power rate ordinances that will raise DWP rates annually for the next five years. If Mayor Eric Garcetti signs the ordinances, they will start jacking up your bills within months.

The city has received over 2,000 angry letters of protest about the rate hikes. That may be why Council member Felipe Fuentes introduced a motion for DWP governance reform to be put on the ballot later this year.

The DWP is governed by a five-member board of commissioners, but the utility is really a department of the city, controlled by the mayor. The commissioners are appointed by the mayor and may be removed at any time. The mayor even controls the board’s agenda.

Over the last 15 years, study after study has concluded that the DWP’s governance structure is a problem. There are too many layers of political control, which prevents efficient decision-making and saddles ratepayers with the costs of pet projects, as well as over $250 million per year for general city expenses. DWP salaries are significantly higher than the salaries of L.A. city workers in comparable jobs, and more than double the average salary for comparable jobs nationwide.

Real governance reform would redefine the roles of the board, the general manager and city officials. It would create clear lines of authority and accountability, and it would prevent the kind of political influence or micro-managing that interferes with day-to-day operations.

Instead, city officials have proposed replacing the volunteer board of commissioners with a full-time, salaried board. The mayor also called for more predictable rate adjustments and an overhaul of hiring and contracting practices. Garcetti said he looks forward to a “thorough public discussion” with “stakeholders across the city,” led by Council President Herb J. Wesson Jr.

Wesson sent a letter to the city’s 96 Neighborhood Councils on Feb. 19.

“Dear Neighborhood Council Leaders,” he wrote. “Today marks the beginning of an open and public conversation about making the city’s utility run more efficiently and effectively while ensuring accountability.”

Wesson asks the council leaders to “agendize this item for discussion and action” at their March and April meetings. “This is your time to shine and show the city and its residents the importance and value you bring to city government,” he wrote.

That’s not the way other cities have reformed their utilities.

In 2012, people in Austin, Texas, had some of the same problems with their city-owned utility that L.A. residents have with the DWP.

Rates were going up. Austin Energy had just spent $80 million on a new billing system which was riddled with problems. And the city required the utility to transfer $155 million a year of the money collected from ratepayers to cover general government expenses.

Austin set up a commission to figure out how to make Austin Energy run more efficiently. The commission reviewed research papers on the governance of municipal utilities around the country, studies by the University of Florida, Price Waterhouse, Navigant, the American Public Power Association and the RAND Corporation, and comparisons of utility governance in San Antonio, Denver and Jacksonville.

Sacramento is another city that reformed the governance of its municipal utility. In 2002, the board of directors of the Sacramento Municipal Utility District (SMUD) brought in John Carver, an Atlanta-based expert on nonprofit governing boards. Carver gave the board a presentation of a model he calls Policy Governance, which is designed to make a board effective by balancing independence and accountability.

Ultimately the SMUD board brought in another specialist in governance reform, Leading Resources Inc., to create customized policies for improved efficiency.

Between 2006 and 2011, SMUD’s electricity rates went up by 3.78 percent per year, while LADWP rates rose at an annual rate of 5.67 percent.

Colorado Springs reformed the governance of its public utility in 2011 with a wide-ranging study of reports from consultants and citizen commissions going back to 1993. Researchers looked closely at the city charter, the rate-setting authority, the governance of similar utilities, alternative governance structures, and factors affecting credit and interest rates.

But Los Angeles will reform DWP governance simply by adding it to the agenda of the Neighborhood Councils and discussing it at the March and April meetings.

That’s not how you reform the governance of the nation’s largest municipal utility if you’re serious.

That’s how you do it if you’re trying to fake seriousness just long enough to get a five-year rate increase passed.

LA Renters: How Do They Do It?

Photo courtesy of channone, flickr

Photo courtesy of channone, flickr

A scroll through rental sites like Trulia or Apartments.com brings up a one-bedroom/one bath in Westwood at $3,100 per month and a studio in Miracle Mile at $2,295. Conventional financial advice is to spend no more than 30 percent of gross monthly income on rent, which translated into real terms, would mean an income of $97,160 to comfortably afford average rent in Los Angeles, according to a December 2014 analysis by Zillow.

The rental situation results from a perfect storm of single-digit vacancies, median home prices at $554,100 per Zillow, and wages that have not caught up with the rental market. Rental pricing is a function of supply demand. If few units are available, rents will rise to what the market will bear, barring rent control or other regulations.

Just how significant is the problem? A nationwide study by the Joint Center for Housing Studies at Harvard University concluded that close to 60 percent of renters in the LA/OC metro area are “burdened,” meaning they spend more than 30% of their income on rent, leaving less in the pot for other expenses like food and healthcare, not to mention savings and disposable income, hurting the economy and dashing hopes to eventually become a home owner.

About a third of renters (32.8 percent) are “severely burdened,” meaning they spend more than half of their income for rent and utilities, a percentage that has increased by less than half a percent this year but still reflects a growing problem.

Although rent in San Francisco/Silicon Valley and New York outpace Los Angeles, the wage gap in Los Angeles is what makes rent affordability a troubling issue in the City of Angels. Nearly 91 percent of those earning $15,000 to $30,000 need to pay 70 percent of their monthly paychecks towards housing. Among moderate earners ($30,000 to $45,000), 78 percent pay rents that exceed the 30 percent threshold. Slightly over one in four who earn over $45,000 are rent-burdened.

A study by the NYU Furman Center and Capital One concluded that L.A. has the biggest gap between rising rents and falling wages of any U.S. city. The average paycheck in the L.A. Metro area has decreased by 4 percent between 2006 and 2013, while rents increased by 11 percent.

As the price of single-family home ownership continues to increase, rising 5.2 percent during 2015, median incomes in L.A. increased by only 2.9 percent, just above the national average. Housing forecasts indicate that many Angelenos are destined to be lifelong renters, which, you’ve got it, increases demand and decreases supply. With a nod to your high school economics teachers, that means rent is bound to continue escalating.

The increasing rental market is bringing construction but vacancy rates have dropped to just 2.7 percent in hot neighborhoods like downtown. Over half of the new 5,200 rentals listed online are located downtown. Keeping in line with Mayor Garcetti’s ambitious proposal to increase units by 17,000 by 2017, more than 15,000 units are under construction all over LA.

Despite the increase in units, a third quarter rental market report by Marcus & Millichap concludes that rents are continuing to spiral upward. Rents throughout the city were up by 7.8 percent and are expected to continue the climb by more than double the rate of inflation.

Even in the (818), where renters traded in shorter commutes for affordable housing, rents are up by 7.4 percent, the highest rent increase in the Northeast Valley, where rents are up 15.1 percent. The increase in rents in the Valley may be in part due to the cooldown in construction, though 3,100 units are expected to be added to the market next year.

Central L.A. rents have outpaced the rest of the city in rents, increasing an average of 6.2 percent, with the biggest increases in Hollywood where average rents rose by 7.2 percent to $2,209 per month. Mid-Wilshire rents increased by 6.4 percent.

Downtown, rents increased by 5.3 percent, likely because of an upswing in development. Of the 2,800 units built in Central L.A., 1,900 were located downtown. The vacancy rate downtown hovers around 3.7 percent, lower than in other areas and about ten percent of apartment units offer concessions to attract renters to sign a lease.

Rents on the Westside are up 6.8 percent with Palms/Mar Vista seeing an upsurge of 10.5 percent. Average rents in Santa Monica and Marina Del Rey are now over $3,000 per month, higher than Brentwood/Westwood/Beverly Hills, where the average rent is now $2,891 per month, up by 9.3 percent since last year. About half of the new units built on the Westside are in and around Santa Monica. In 2016, over 1,000 new rental units are expected to be built, more than 700 in Santa Monica and Marina Del Rey.

Is Los Angeles destined to remain unaffordable to low- to moderate-income residents? The mayor’s ambitious proposal includes step increases of units to 150,000 units by 2025. He also hopes to increase affordable housing units close to mass transit.

Any solution to the affordable housing problem must address wages and enticements to developers and investors to develop units that are within the budget for more Angelenos, as well as zoning restrictions to curb the building of expensive housing.

This piece was originally published by CityWatchLA.com

Beth Cone Kramer is a Los Angeles-based writer and CityWatch contributor. Prepped for CityWatch by Linda Abrams.