LA WATCHDOG--The Department of Water and Power’s $50 million La Kretz Innovation Campus and its major tenant, the Los Angeles Cleantech Incubator, are a welcome addition to the City’s economic development infrastructure. But this does not justify the use of more than $20 million of DWP Ratepayer money to finance this pet project initiated by Mayor Villaraigosa and the Garcetti led City Council.
The Campus, located on 3.2 acres in the Arts District in DTLA, consists of 60,000 square feet of “modern, creative office and laboratory spaces” in a single story, renovated warehouse that was built in 1923. Today, this formerly unreinforced masonry building is now LEED certified (Gold) and has state-of-the-art sustainability features including a photovoltaic system and Micro Grid and Gray Water Systems.
There is also ample parking and a 25,000 square foot park that will be “leased” to and operated by the underfunded Department of Recreation and Parks.
DWP financed this project and the remediation of the park with about $20 million of Ratepayer cash. The balance of the $50 million was financed by a $3 million gift by Morton La Kretz, a real estate developer, in return for the naming rights, and various government related programs, including the federal government’s New Market Tax Credits ($9.5 million), Qualified Energy Conservation Bonds ($8.1 million), and the Community Redevelopment Agency ($1.25 million).
The major tenant is the Los Angeles Cleantech Incubator, a non-profit formed in 2011 by the City, designed to nurture early-stage clean technology business; create green, living wage jobs; and create a more sustainable and livable City. It will also support the City and DWP in meeting their environmental, renewable energy, energy efficiency, and related clean technology goals through companies that it incubates.
The Incubator has a sweetheart lease where it will pay only $1 a year for its 38,000 square feet (63% of the building) and utilities. DWP will also be entitled to 50% of the net revenue after expenses in excess of $1.5 million a year.
DWP will also pay the Incubator $895,000 a year to provide property management services.
The remaining 22,000 square feet will contain DWP’s “energy efficiency and water conservation laboratories, a customer engagement center, and emerging technology center and cutting edge exhibitions of the latest technologies promoting water and energy efficiency.”
But based on the cost of this facility, this is very expensive space that would probably rent for more than $1.25 million a year.
Unfortunately, this is just another example of DWP being hit up by the City to showcase its services, similar to the $4 million investment in the Children’s Museum in Lake Terrace and the $200,000 for El Pueblo.
The investment of $20 million of Ratepayer money, the property management contract for $895,000 a year ($27 million over 30 years), and the inadequate return on investment are unacceptable, especially given that Ratepayers are already being slammed for $273 million this year in connection with the illegal 8% Transfer Fee.
As part of the review and analysis of the proposed $1.4 billion, 32% rate increase in our water and power rates over the next five years, we need a thorough airing of all the pet projects and the development of a comprehensive program where the City reimburses DWP and its Ratepayers for all related expenditures.
The Mayor and the City Hall must realize the DWP and its Ratepayers are not their ATM. Otherwise, there will be hell to pay at the ballot box in November of 2016 when the State, County, and City ask us to approve big time increases in our taxes.
(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: [email protected])
-cw
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