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Wed, Feb

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. 

●●●

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

 

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--Ever since Mayor Villaraigosa and the Eric Garcetti led City Council eviscerated the budget of our Department of Recreation and Parks in 2010 to help balance the City’s out of control budget, Rec & Parks has been on a mad dash for cash, willing to sell its soul for a few extra bucks, the hell with the neighboring communities.  

Under the new “full cost recovery” program that targeted the Recreation and Parks budget, City Hall slammed the Department with $38 million in chargebacks, consisting primarily of costs for water and power ($16 million) and General Fund expenses ($17.5 million).  This ding represented more than a quarter of the Department’s appropriation in the 2011 budget.   

Despite the healthy increase in City revenues, this policy has only gotten worse as chargebacks for the upcoming year have ballooned to $60 million, representing more than a third of its General Fund revenue. 

As a result, our parks are in disrepair and its programs gutted as the Department has eliminated more than a quarter of its worker bees. 

While the commercialization of our parks is understandable, it has not been well received by Angelenos who believe our parks should be free of billboards, signage, and other forms of intrusive advertising and corporate sponsorship.  And this opposition has only been fueled by the ham handed Department managers and Commissioners who have been less than transparent with the public, especially with those that live in close proximity to the parks. 

A prime example is the near riot by Hollywood residents over a plan to commercialize Runyon Park by allowing Pink + Dolphin, a streetwear company, to place its controversial logo on a newly constructed basketball court in exchange for $250,000.  This situation was further aggravated by Rec & Parks failure to engage the Hollywood community. 

As a result of the furious backlash, Councilmember David Ryu called a halt to this deal, at least for the time being.   

We are also seeing opposition to AngelFest, a new three day “family friendly music, food and cultural festival” that may be held in October in the Sepulveda Basin Recreation Area.  And while the Department will take in an estimated $1 million over the next three years that can be reinvested in the local parks, the Department failed to engage the environmental and conservation communities who are concerned about the adverse impact on the park and its wildlife. 

The Department also stirred up a hornet’s nest when it bungled the proposal to have Live Nation and Anschutz Entertainment replace Nederlander as the operator of the Greek Theatre in Griffin Park.  As a result, Rec & Parks will “self-manage” the venue, a scary thought given the City’s lack of management expertise and the need for the cash strapped City to invest $20 to $40 million to upgrade the aging venue. 

We are also seeing controversies where the residents of Beachwood Canyon, Hollywood Land, Lake Hollywood Estates, and the Hollywood Dells are in open revolt against the Department because of the traffic and safety issues resulting from tourists flocking to see the Hollywood sign. 

We also have issues involving Elysian Park and Councilman Gil Cedillo’s efforts to raid a $12.5 million fund set up by the Department of Water and Power to mitigate the impact of a covered reservoir. 

Now is the time to reform our Department of Recreation and Parks. 

The first step is to establish a better relationship with the public.  This would include a Memorandum of Understanding with the Neighborhood Councils similar to the successful arrangement with the Department of Water and Power.  This would also involve considerable outreach to the public, something the Department has not done with any consistency. 

At the same time, the Department needs to develop a long range operational and financial plan that meets the goals of all Angelenos. 

Once the Department gains the trust and confidence of the public, the City should place a measure on the ballot that would increase the charter mandated appropriation by $75 to $100 million over a four year period.  At the same time, the Department would assume responsibility for all its direct and indirect expenses. 

Importantly, this is not be a new tax, but would require the City to allocate scarce funds to the Department. 

This is similar to Measure L, the March 2011 charter amendment that was approved by 63% of the voters that increased the mandated funding for the Library Department by over 70%. 

The Department of Recreation and Parks has been the center of increasing controversy, in part because of its lack of funding and the failure of its management to develop an open and transparent relationship with the public. 

But now is the time for the Department to develop and implement its good neighbor plan. 

(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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