CommentsCORRUPTION WATCH-Los Angeles has significantly more people leave each year than move here. We now know who is leaving the City – the Millennials starting families. Los Angeles has become a city to avoid as we are #60 on places where the professional and business service class want to live. That attitude holds true for all the middle class. Some older middle class citizens are stuck in LA since they bought their homes decades ago and their children are finished school. However, the Millennials who are deciding to start a family are moving away in droves.
When tens of thousands more people leave the City than chose to come here, the supply of vacant housing increases. For several years, Los Angeles has seen its vacancy rate climb, except for one segment – rent controlled housing. Mayor Eric Garcetti has been tearing down poor people’s homes with a vengeance, swelling the ranks of the homeless.
How does Garcetti get away with both the massive destruction of poor people’s homes and the construction of luxury units which show an ever increasing vacancy rate? Building more luxury units in Los Angeles is like stocking a kosher butcher shop with pigs’ feet. You know something isn’t right.
Why would the kosher shop load up on pork products, when no one is buying them? And why is Los Angeles constructing more luxury condos and single family homes which are eight inches apart? Yes, I said eight inches!
The answer to both questions is the same – the butcher shop no longer cares about being kosher and is catering to a different clientele; so too with the City of Los Angeles. Its housing policies have nothing to do with the housing desires or needs of Angelenos.
Corruption Destroys
While power tends to corrupt and absolute power corrupts absolute, “corruptionism” destroys. With the blessings of the courts and law enforcement, the Los Angeles City Council has become a bona fide criminal enterprise. I do not mean this metaphorically; I mean it literally. The Los Angeles City Council is a criminal enterprise.
I do not suggest that it caters to criminals, nor do I merely imply that councilmembers are crooks. I mean that the City Council itself is The Criminal Enterprise. In the olden days of Al Capone and Elliot Ness, Chicago had corrupt judges and a plethora of city officials on the take. In Los Angeles, however, the City Council itself operates according to Mutual Bribery.
The term Mutual Bribery is used because the State of California amended Penal Code § 86 in 2006 to forbid any councilmember to trade his or her vote in return for a vote by another councilmember. Penal Code § 86 is one of the California’s anti-bribery statutes. In the Los Angeles City Council, Mutual Bribery operates very efficiently. Each councilmember agrees to never vote No on a construction project in another council district. The reciprocal nature of their agreement is why it is called Mutual Bribery.
The Los Angeles City Council unanimously approves each construction project in the City 99.9% of the time. The courts see nothing wrong with this practice. The likelihood that this unanimous voting occurs “by chance” is less than one in one thousand billion, billion, billion. I think the number is written 1/1,000 followed by 18 zeros. Yes, ten years of unanimous voting is merely a statistical coincidence!
But what is wrong with the system? After all, it is very efficient. All a developer needs to do to have his project unanimously approved is to have a kindly councilmember place it on the City Council agenda. It will be unanimously approved. And here’s the great part of the Los Angeles City Council: even if not a single councilmember actually votes for the project, it gets unanimous approval.
Gee whiz, what could go wrong with a system in which a developer is guaranteed his project, no matter how many laws it violates and will get unanimous approval -- even if not a single councilmember leans forward to press his Yes button? The City Council has rigged its vote tabulator so the machine automatically votes “Yes” – a quirky reflection of the corruption at City Council. So let’s look at the impact of corruptionism.
Ramifications of City Council’s Mutual Bribery
When a city retains a construction company to build something, it is supposed to use competitive bidding. When the developer is chosen in secret with zero public oversight, there is great potential for pay offs, bribes, shoddy construction, skimming, etc. The unanimous vote trading at City Council allows a single councilmember to meet in private with a developer to construct whatever he wants, and then the City is compelled to pay for a substantial portion of the project.
For example, look at Grand Ave Project across from Eli Broad’s Museum in DTLA. The City Council unanimously voted to give the developer $198 million. Where was the competitive bidding to see if this developer was the best one for the job? There was none. There never is any.
Look at 5929 Sunset where the City gave the developer over $17 million. Was there any competitive bid to see if this developer was the best one for the project? Nope.
Unanimous voting in City Council is habitually used to circumvent the requirement that all City- sponsored projects are subject to competitive bidding. Instead, one councilmember and one developer make a secret deal, and then, after that, the City Council unanimously approves millions of dollars for that project. CIM Midtown in Council President Herb Wesson’s CD 10 reportedly got $42 million plus all the sale taxes earned by retailers at the project site.
Across LA, we see the City as “co-sponsor” of project after project based upon secret deals between one councilmember and one developer. Never is there any competitive bidding. That’s because the developer is selected before the city money is donated.
As a result, billions of tax dollars are funneled to developers who are destroying LA neighborhoods and looting the public treasury with zero oversight. The courts see nothing wrong with this system.
But wait, it gets worse!
The construction mania continues and City Hall is in a panic over the Neighborhood Integrity Initiative [NII]. Why is that? As everyone knows, the middle class is deserting Los Angeles. There is an increasing glut of these luxury condos and yet the City wants to construct more and more of them. Yes, that brings us back to: why would a kosher butcher shop stock pigs’ feet?
There Are a Couple Scams
(1) The City will borrow the money and give it to the developers, who then will bankrupt their LLCs and LLPs, leaving the City’s taxpayers to repay Wall Street. The tax dollars that flow to Wall Street will then not be available to pay for our infrastructure improvements. The decaying infrastructure will then cause more businesses and more of the middle class to flee the City. None of that matters as long as the developers can siphon off hundreds of millions of tax dollars.
(2) The newest angle is money laundering. Since Putin has made moving money out of the Russia illegal, the desire of Russians to move money to other countries has naturally increased. (Putin does not understand that his own massive corruptionism is the major reason so many Russians are devising schemes to get their cash out of their country.
In order to cut down on not only Russians but also Chinese who are looking to stash their money overseas, the United States has a new rule requiring the reporting of real estate investments by foreigners. More specifically, in Manhattan and Miami-Dade real estate transactions of more than $3 million in NY and more than $1 million in Miami have to be reported. The purpose is to stop money laundering not only by Russian oligarchs but also by drug traffickers, Blood Diamond traders, weapons dealers and a host of other international criminals.
So far, Los Angeles is not on the list of locales where reporting is required. Thus, some thug who made his money by the child labor and mutilations in Central Africa can still secretly buy up Los Angeles condos and small lot subdivisions (the new single family homes separated by 8 inches.) LA developers do not care who buys their units.
Looking ahead, one can anticipate the Feds placing the same reporting requirements on LLCs and LLPs in Los Angeles real estate market and this is why condos and small lot subdivisions are so important. If a Russian oligarch buys a 12-unit apartment house for $10 million, his identity cannot be kept secret. But if he buys 12 condos or 12 small lot subdivisions, each one will be less than the reporting requirement. Secrecy is very important, especially if you’re hiding your money from Vladimir Putin.
Why the Los Angeles Power Structure Circles the Wagons to Protect the Mutual Bribery at City Council
We see why the entire Los Angeles power structure does not want anything to interfere with the Mutual Bribery running City Council. It is an extremely efficient system to get in on the international money laundering craze. In a year or two, it will probably be some other criminal venture that will become all the rage.
With Mutual Bribery, there is never any disclosure of who is paying whom and how much is being paid. Each councilmember is the petty dictator in his or her district. All we Angelenos know is that our infrastructure has decayed, our taxes are increasing and our quality of life is deteriorating.
(Richard Lee Abrams is a Los Angeles attorney. He can be reached at: [email protected]. Abrams views are his own and do not necessarily reflect the views of CityWatch.) Edited for CityWatch by Linda Abrams.
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‘Mutual Bribery’ or Why We Have Unanimous Voting in City Council
