Weekly Report – August 8, 2016 – Issues Update

The Mayor’s and Coalition’s Operation Innovation Team (OIT): OIT has completed year one of a two year assignment. OIT is now focused their time on securing budgetary, legislative, and department-level support to advance reforms to the City’s $1.8 billion real estate portfolio, $300 million workers’ compensation and risk management costs, and the City’s annual $8.2 billion procurement spending. Progress to date: redesigning and relaunching BAVN (the City’s procurement storefront), procuring ePropertyPlus (the City’s interim asset management system), helping spearhead the Civic Center Master Plan, redevelopment of Lincoln Heights Jail, and launching the first annual Mayor’s Cup, to promote the City’s openness to innovation and disruptive ideas. To date OIT has leveraged more than $6 million in investment from the City’s budget and significant pro-bono expertise and consultation. At this point in the process the Mayor will have to push harder if he truly wants to reform city government – nearly one employee out of every six on the 44,000-person city payroll is off the job on workers’ compensation. For the police and fire departments the number is one in three. The annual cost to the city is $200 million. The procurement process – if matters go well – means a contract can be awarded in 462 days. If a losing bidder files a grievance, it can stretch to 800 or more. Signing a contract with a vendor for, say, new parking meters requires drafting an economic analysis, approval from the city attorney’s office, and a vote from the city council. If a women or minority owned business wishes to do business with the City, there is a 3 1/2 backlog to just get certified. This most likely accounts for only one half of 1 percent of women owned businesses in the City of L.A. benefiting from the City’s $8.2 billion annual procurement spend.

  • Support Needed: The Mayor’s Office has ensured these reforms are priorities. Please use any opportunity to communicate the Coalition’s support of this initiative directly to the Mayor and his senior staff.

Measure M: L.A. County voters will be asked on November 2016 to approve a half-cent sales tax increase (from 9.5 percent to 10 percent) to fund, indefinitely, a major expansion of the region’s transit network. A 2/3 vote is needed (current polling is in the low 70s). Passage would generate at least $860 million per year to support Metro’s ~$120 billion plan to fix the county’s rail network through the San Fernando Valley, the San Gabriel Valley and the Sepulveda Pass. The so-called L.A. County Traffic Improvement Plan would also fully or partially fund 10 new highway projects, including an extension of State Route 71 and a new carpool-lane interchange between the 405 and 110 freeways. The big ticket item is a $17 billion 405 Freeway tunnel. These projects would put $79.3 billion back into the economy, create an estimated 465,000 jobs and bring in $9.5 billion in tax revenue for the city, state and federal government. The measure would be the third tax that funds Metro without an expiration date. This will compete with two County measure to approve a parcel tax for parks and a community college bond measure. Also, City of L.A. voters will weigh a proposal to issue $1.2 billion in bonds to build housing for the homeless.

  • Potential ask from Elected Officials: The Campaign for Measure M will be asking business and civic leaders for money to fund a campaign to pass the measure.

Land Use Ballot Initiative(s): Backers of two proposed ballot initiatives continue to gather signatures to qualify for the March 2017 election. One community driven measure would impose a moratorium on construction, that increases development density, for up to two years and prohibit project-specific amendments to the city’s General Plan. Labor’s measure would require that a percentage of construction jobs at large-scale residential projects in L.A. go to local or disadvantaged residents and require real estate developers to provide affordable housing when seeking city approval for residential projects that are larger than planning rules allow. Additional options would include building it nearby or paying fees to the city. (Side note: Development fees – charges levied on builders as a condition of development – are higher in CA than the rest of the country – the difference: $22,000 versus $6,000, on average. It takes seven months to get a building permit in coastal areas (compared with 4 1/2 months nationally), 12 months to get a rezoning variance (compared with 9 months), and projects subject to the state’s intensive Environmental Impact Review process take an average of 21/2 years to approve.) Mayor Garcetti and the L.A. City Council proposed their own reform package that would draft a new general plan (a master planning document that hasn’t been updated in 20 years) and rewrite all of the city’s 35 community plans over the next decade. The challenge – most staff members in planning push through plans and are not planners. City Council recommendations focus on an increase oversight of the environmental review process, and upgrade outdated technology. Private sector experts recommend that any changes to the Community Plans and a General Plan should take out 80-90 percent of the projects out of the system and made them build by-right. There is already an ongoing comprehensive update to the L.A. Zoning Code, which was last updated in 1946. This five year initiative aims to develop a modern and user-friendly Code in order to create livable communities, encourage sustainable development, and foster economic vitality.

  • Potential ask from elected officials/business associations: A campaign to defeat the measures is being developed and they will be looking for money from developers, business and civic leaders.

L.A. Mayor Eric Garcetti: When the Mayor was elected in June 2013 his inaugural address told the crowd that as their “back-to-basics mayor,” he would drag “a rotary-phone government into the smartphone era.” The Mayor has rolled out lots of little things intended to make life in L.A. more livable, from distributing more public trash cans to repaving more streets, fixing potholes, reducing call wait times at city offices, improving trash pickup. These issues had been ignored for years and he wants to restore Angelenos’ faith in local government. As to fiscal responsibility, the City faced a projected shortfall of $165 million at the start of his term, and now the City is experiencing healthy revenue growth and a budget that is balanced. (The City’s reserve fund is now $322 million, the largest in City history.) Some of his most progressive policy initiatives have been the insistence that at least half of the city commissioners be women and the establishment of a citywide hike in the minimum wage. On infrastructure he was successful on persuading the Army Corps of Engineers to allocate serious funds to the L.A. River restoration (L.A. was committed to footing the bill for half, but the price tag has climbed to $1.4 billion, and even if Congress approves a proposal for federal funding, the city’s share is likely to be $900 million – a tall order, given the various demands on the budget), advancing plans to connect light-rail to LAX and a sweeping earthquake retrofit that will help shore up thousands of buildings throughout the City. The Mayor has also been empowering the City workforce with upgraded technology by modernizing the City’s network backbone and providing mobile tools to our workers in the field.  The challenges continue to be numerous – during Garcetti’s administration, the homeless population in the city has risen by 18 percent, to more than 28,000 (up until a few months ago 15 entities that dealt with the homeless didn’t coordinate much with one another or with county agencies, and although L.A. was spending more than $100 million a year on homelessness, only a fraction was earmarked specifically for it, with about $80 million going to the police). In May the city council approved Garcetti’s $138 million plan for more housing and services for the homeless, a fourfold increase over what had officially been allotted before. Crime remains an issue. California’s decriminalization and deincarceration policies are affecting crime rates by ignoring 2015 and 2016 data, so far in 2016, violent crime is up 16 percent in L.A., the biggest source of crime in the Golden State. His last budget is strengthening the City’s public safety workforce by hiring 525 police officers to reach his goal of 10,000, adding 160 civilians to put more officers on the streets. Big outstanding issues: education, workforce development, city pension costs, true cost of infrastructure investments needed, DWP reform and a overall jobs plan for the regions of the City will sustained high-unemployment, i.e. South L.A.

  • Potential ask: The Mayor is up for reelection (March 2017) and wants the support of L.A.’s leadership in the private sector.

Port of Los Angeles: BNSF Railway Co. is appealing a judge’s ruling against the freight railroad’s plan to build a rail yard near the ports of Long Beach and Los Angeles. The judge ruled in March that an environmental review of the Southern California International Gateway project wasn’t properly done, dealing a blow to BNSF”s efforts to expand its operations out of the largest import gateway in the U.S. The railroad called the ruling “incorrect,” adding, “The lower court applied an inappropriate evidentiary standard and disregarded a comprehensive eight-year environmental review in making its ruling.” Unless the ruling is reversed, the railroad may walk away from the $500 million investment altogether. Opponents of the project, which included nearby businesses, neighbors, air-quality regulators and the City of Long Beach, had claimed victory after the ruling, saying the expected increase in truck traffic, pollution and noise would have hurt their communities. Supporters of project, which has been in development for nearly 10 years at a cost of more than $50 million, said the terminal would add badly needed rail capacity and reduce overall truck traffic in the region. Currently, the closest BNSF terminal to the ports of Los Angeles and Long Beach is roughly 25 miles away. Its new terminal would be 4 miles away from the ports. The facility would load containers, trucked from nearby port terminals, onto trains bound for inland hubs such as Chicago and Houston. The Port of Los Angeles also joined BNSF in appealing the ruling based on the argument that the SCIG Project is vitally important to improve the efficiency of the entire San Pedro Bay Ports complex. Port leadership strongly believes an environmental impact report it completed “fully met all requirements.” BNSF and Union Pacific Corp. are the only two major railroads serving the Southern California ports. Both have run into trouble with recent expansion plans. Union Pacific has been locked in what the company has called “environmental review purgatory” at the ports for nearly a decade as it tries to double capacity to handle 1.5 million shipping containers annually.

L.A. City planning and building department reforms: In the past decade two proposals to speed project approvals through the city’s processes have died. One termed “12 to 2” and another was a proposal to merge Building & Safety with Planning. The new method is based on a “partnership” model, to better address the City’s approach to land use, project approval processes and economic development. The waiting time for a permit at the Department of Building and Safety has fallen dramatically. In a city whose government remains choked with bureaucracy, small improvements don’t necessarily come easily. Each department’s level of expertise is leveraged – Building and Safety, Fire, Water and Power, Public Works, Housing, etc. – to create a more proactive system to not only enforce the rules and regulations that are already in place, but provide hand-holding services – advise, guide, and assist projects to comply with the regulations. A “partnership” example is the task force to work on both homelessness and affordable housing. The Housing Department, the Fire Department, Public Works, Planning, and also the Police Department are involved. The Fire Department has implemented three significant initiatives within the last year. First, a nurse practitioner can now issue medication on site. That avoids filling up the Emergency Rooms. Second, they are implementing fast response vehicles, specifically in the Skid Row area, to jump on radio calls. Lastly, in regards to temporary homeless shelters, there is an initiative allowing facilities to turn into a temporary shelter.

Biotechnology: A growing, cross-sector partnership of local government, private sector industry, and educational institutions have a common vision for the LA Bioscience Corridor to be the center of LA’s bioscience innovation and activity. Through creative collaboration, our partners are leveraging each other’s knowledge, resources, and area investments to drive additional investment and activity to the LA Bioscience Corridor. Now, developer Agora Partners is pitching in, putting private investment into plans to develop a “bioscience corridor.” Agora with ASG Real Estate bought a former factory on Alhambra Boulevard in April for just over $2 million and is converting the 22,000-square-foot site into offices and labs. The idea is to recruit startups that have outgrown incubators and need high-security facilities but can’t afford pricier areas. Their goal is to seek up to 10 tenants in bioscience research and manufacturing. Meanwhile, Cal State Los Angeles is building LA BioSpace, a 20,000-square-foot incubator set to open next year and USC President C.L. Max Nikias also last year renewed the university’s pledge to build a Biotechnology Park next to its Health Sciences Campus.