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Wed, Aug

Who's Going to Pay for LA's Multibillion Dollar Capital Program?

LA WATCHDOG - In November, the City issued its Five Year Capital and Technology Improvement Program that outlined over 650 infrastructure projects with a project cost of $9.2 billion.

This includes $4.5 billion that has been spent in prior years, leaving $4.7 billion of expenditures over the next five years.  While there are many questions raised from reviewing this 411 page report, it is an excellent beginning of the process of understanding the City’s long term capital requirements and underlying sources of funding. 

These projects do not include projects for the three proprietary departments (Department of Water and Power, Port of Los Angeles, and Los Angeles World Airways) and those related to housing and homelessness.  And it does not include “unfunded” projects such as the Civic Center (over $2 billion), the Convention Center ($500 million), the Los Angeles River (in excess of $1.5 billion), the requirements of the Clean Water Act ($8 billion through 2037), and the long term needs of Recreation and Parks, streets, and sidewalks. 

The City has developed three asset classes: Municipal Facilities, Technology, and Physical Plant. 

Municipal Facilities will require about $500 million for deferred maintenance of administrative buildings and repairs and for improvements tor office buildings, police and fire stations, recreation facilities such as parks (including pools, gyms, and senior centers), libraries, the zoo, bridges, and other city facilities. 

Technology is projected to spend $175 million on a variety of projects, including, among others, the Human Resources and Payroll system, the upgrading of the police and fire radio infrastructure, and new systems for Planning and Building and Safety. 

Physical Plant expenditures are anticipated to be almost $4 billion over the next five years.  Initiatives include clean water and stormwater projects; streets, sidewalks, and green street infrastructure; street lighting; and other transportation projects.    

There has not been any discussion about how to finance the city’s ambitious capital plan other than 86% ($4 billion) will be from Special Funds.  This implies that the City will issue bonds supported by new property or parcel taxes, increase our sewer fees, or establish new taxing entities.  

Any new taxes or issuance of bonds will require the approval of two-thirds of the voters.  As such, the City needs to convince us that these projects are worthwhile, in our best interests, and managed efficiently, starting with the Neighborhood Councils and the Budget Advocates.  The City must also overcome the dark cloud of corruption and make a concerted effort to earn the trust, confidence, and respect of Angelenos. This starts with the repeal of Section 245(e) of the City Charter.

 

(Jack Humphreville writes LA Watchdog for CityWatch. He is the President of the DWP Advocacy Committee, the Budget and DWP representative for the Greater Wilshire Neighborhood Council, and a Neighborhood Council Budget Advocate.  He can be reached at:  lajack@gmail.com.)