How a Valley City Would Operate

By HOWARD FINE

Staff Reporter

It’s all but assured that voters will determine this November whether the San Fernando Valley should secede from the city of Los Angeles, creating an historic showdown that likely will reshape the city’s future.

But amid the debate over who gets what assets, how much “alimony” the new Valley city would have to pay to Los Angeles and who will run for what office, there’s been little discussion over a central issue: How a new Valley city would function.

Even if the Local Agency Formation Commission, or LAFCO, votes on or about May 15 to put Valley secession on the Nov. 5 ballot, and the measure gets passed by separate majority votes in the Valley and the city at large, a full breakaway is years away.

Numerous questions remain over how basic city services would be performed questions that even secession proponents cannot answer.

For the first few months after a new Valley city incorporates on July 1, 2003, little would change. Virtually all services police, fire, street and sidewalk repair, stray dog removal, etc. would still be provided by the City of L.A.

The only major change would be the election of a mayor and councilmembers of the new city. But those councilmembers might soon find themselves frustrated: they would have to call department heads in the City of L.A. to get a pothole fixed, a traffic signal repaired or new police substation fully staffed.

“It’s really a very simple thing that people haven’t thought about during the transition period: you will have elected officials with no direct oversight over the departments that service their constituents,” said Raphael Sonenshein, professor of political science at California State University Fullerton. Sonenshein was executive director of one of the L.A. charter reform commissions.

Toward the end of a “transition period” that expires in June 2004, Valley residents could expect to start seeing changes in how basic services are delivered. Many would continue to be performed by the City of L.A. for at least another year or two; others would be taken in-house; while still other services might be contracted out to other public agencies.

Secession proponents say functions like planning, parks and recreation, and financial management are likely to be taken over by the new city first, with public safety and street services likely to follow later.

Even then, the new city might not be running essential services.

“We might actually enter into a long-term contract with the L.A. City Fire Department or with the L.A. Police Department to provide public safety services,” said Jeff Brain, president of Valley VOTE, the group pushing to get secession on the ballot. “That will all be up to the new City Council.”

And therein lies the reason for much of the vagueness about what a new Valley city would actually mean to residents and businesses. Many of the major decisions affecting the new city’s crucial first few years won’t be made until a new City Council convenes after the Nov. 5 election. Throw in the possibility of legal challenges by those opposed to secession and the picture gets murkier.

“There’s a sense that things won’t change much for the average citizen for the first year, but by year five, it’s going to look much different,” Sonenshein said. “The trouble is, we don’t know what the new city is going to look like in five years. No one, not the Valley secession proponents, not the City of L.A. and not the Local Agency Formation Commission (LAFCO), has really addressed that.”

Brain said that once secession gets on the ballot his group would lay out its vision for a new city.

Those living in the remainder of Los Angeles would see major differences almost immediately. Their city council districts would be drastically altered because the same 15 L.A. council districts would be squeezed into just 53 percent of the original city’s land area. While smaller districts may enable councilmembers to be more responsive, they may also break up some neighborhoods now in one district.

Finally, although Valley secession proponents promise that a new city could save tens of millions of dollars annually through more efficient delivery of services, there’s no guarantee that they can follow through.

Brain said that secession proponents have spent a lot of time studying other cities similar in size to the proposed Valley city, such as Phoenix, San Diego, Houston and Dallas.

“All of these cities are able to deliver services at about $1,100 per capita, which is much cheaper than L.A.’s $1,356 per capita,” Brain said. “And they are able to put more officers on the street per capita, fix more street miles per capita than L.A. We intend to look at what they’ve done.”

But even Brain admits there are no guarantees of cost savings.

Take union contracts. Given that thousands of L.A. city employees currently work in the Valley, it might make sense for those employees to transfer to the new city so they can perform the same jobs. But for that to happen, the new city would likely have to offer union contract terms comparable to what the City of L.A. offers not much chance for savings.

“It’s certainly possible that Valley residents will get less in services and pay more in taxes than they do now,” said Kam Kuwata, a veteran campaign strategist working on behalf of L.A. United, the political action committee formed last fall by L.A. Mayor James Hahn to fight secession. “All I can see is that this will add a brand new level of bureaucracy. And when you contract out for services with the same entity that was giving you that service beforehand, will you have the same services for less money? Of course not.”

Over the next six months, the debate on these and other secession issues is sure to intensify. And, despite more favorable poll numbers than many expected, secession proponents will have their work cut out for them in trying to persuade voters that breaking up is a good thing to do.

Here’s what a new Valley city would look like:

Government

The new city would have an elected mayor who also would hold a tie-breaking vote on the new City Council. The first mayor would be elected on the same ballot as the secession question, serving until the next general election of the new city. There would be no term limits, unless enacted by the voters in the new city.

There would be 14 city councilmembers, each initially representing 96,000 people, and elected on the secession ballot. (Current L.A. City Councilmembers each represent 245,000 people.) Those from odd-numbered districts would hold office until the first citywide election is held. Those from even-numbered districts would serve four years, until the second citywide election. There will be no term limits for councilmembers, unless enacted by voters.

The LAFCO final report released earlier this month recommends the new City Council appoint a city manager (who would function as a chief executive), a city clerk and a city treasurer. Other positions that Valley VOTE says should be appointed, at least initially, are police chief, fire chief, city attorney, public works director and planning director. During the first year, the new city’s staff is expected to range in size from 30 to 100. It would grow over time as the new city assumes services from Los Angeles.

“Alimony” Payments

LAFCO recommends $55.8 million a year for 20 years. Valley VOTE proposed $66 million a year for 20 years; Los Angeles, citing the need to recoup millions in infrastructure investments in the Valley, proposed $306 million a year for 25 years. This is one of the issues that the City of Los Angeles may challenge in court.

Budget

The 2003-04 budget for the new Valley city would be $1.1 billion. (The proposed 2002-03 general fund budget for the City of Los Angeles, including the Valley, is $4.8 billion.)

The new city would pay for accounting costs involved in splitting city services apart and the annual mitigation fee of $55.8 million. From fiscal 2004-05 on, the size of the budget is up to the discretion of the mayor and city council of the new city, except for the annual mitigation fee.

LAFCO estimates the Valley city would receive anywhere from one-fourth to one-half of various revenue streams flowing into the current City of Los Angeles.

The largest revenue source would likely be property taxes about $240 million followed by utility users taxes ($186 million), sales taxes ($163 million) and business license taxes ($112 million).

Public Safety

The new city would get title to all the police stations and all but four fire stations. (Two of those fire stations are on Mulholland Drive and also serve other parts of the city.) Valley officials likely would consider signing long-term contracts with the L.A. Fire Department and maybe the L.A. Police Department for services instead of forming their own departments at first.

Streets/Public Works

All roads, sidewalks, medians, light standards, signals and other street-related items would be transferred to the new city, except for any easements related to the operation of the water system, the power grid, the wastewater system and the city’s communications network. How the Valley provides street maintenance and other public works will be up to its city council. It could decide to contract with the existing L.A. Department of Public Works, it could establish its own department or buy services from the private sector.

Other City Assets, Services

Secession proponents have pushed for the transfer of virtually all city assets located in the Valley without compensation to Los Angeles. L.A. city officials have tried to place limits on the transfer of assets that are part of centralized infrastructure systems or insist on compensation for the assets that are transferred.

In its final report, LAFCO staff generally sided with secession proponents, saying that the City of L.A. should turn over most of the assets to the new Valley city.

The new city would get title to all the parks within its boundaries, except for 18 parks that are on land leased from other government authorities.

All libraries would transfer to the new city.

The Valley would get ownership and control of Van Nuys Airport, subject to Federal Aviation Administration approval. The airport, especially the noise generated by private jets, has been the source of much friction between nearby residents and L.A. airport officials.

Water & Power

Under the LAFCO final report, the City of Los Angeles would retain ownership and control over the LADWP facilities and operations and would continue to provide service to the Valley. L.A. officials had insisted on charging a premium for water rates because the DWP supplies much of the Valley with water from more expensive sources than in other parts of the city. But the LAFCO report dismissed this argument and recommended that the city charge the same rate for all customers in specific usage classes, regardless of location. On the power side, the new city would enjoy power rates lower than those of surrounding municipalities served by Southern California Edison, at least for the foreseeable future.

City Employees

During the transition year, Los Angeles employees would perform services in the new Valley city. Both the City of L.A. and secession proponents have agreed that employees would decide for themselves whether to transfer to the Valley city. LAFCO staff recommends no mandatory transfers.

Most city employees are covered by a series of 24 union contracts; coincidentally, those contracts are due to expire on June 30, 2004, the same day the transition period would end. That would free the new city to negotiate new contracts to take effect after the end of the transition period.

Also, in a key victory for secession proponents, LAFCO staff has rejected the City of L.A.’s proposal to impose the city’s civil service charter provisions, administrative rules and policies on employees for the new city. The LAFCO final report says the new Valley city should have the flexibility to develop its own civil service and administrative rules, which could enable the new city to save millions of dollars annually.

After the transition period, the new city likely would provide retirement benefits for employees. However, the LAFCO report notes that many police and fire officers who transfer would lose their past pension contributions unless L.A. city voters agreed to make changes to the L.A. city charter to allow for agreements with other pension funds.

Liabilities

In general, the LAFCO report recommends that the new Valley city pay its share of existing debts on a monthly basis until those debt shares are paid off. LAFCO calculated that at about 30.5 percent.

The single biggest source of debt ($1.1 billion) is in the form of lease bonds, meaning that the new Valley city would be liable for $335 million of that.

The LAFCO report recommends the new Valley city also pay its share of sanitation equipment bonds, parking revenue bonds and judgment obligation bonds.

As for the $766 million in outstanding general obligation bonds (as of this past February), the report recommends that the new Valley city adopt the same property tax assessment rates as the city of L.A.

Besides bonds, the single largest debt paid out by the city of Los Angeles is $100 million a year in workers’ compensation-related costs, which, under LAFCO’s final recommendation, would mean the new Valley city would pay out about $30 million a year to discharge workers’ compensation claims.

Development Agreements

LAFCO’s report recommends the new Valley city would abide by all existing development agreements in its territory, meaning that it would assume any payments or other obligations that the City of L.A. is currently bound to. Officials of the new Valley city cannot go back and arbitrarily reopen concluded agreements, say for the purpose of imposing additional environmental or traffic mitigation measures.

Since state law primarily governs redevelopment project areas, LAFCO staff did not draw up terms or conditions for the transfer of those project areas to a new Valley city. However, it is assumed that all redevelopment project areas entirely in the new city would be transferred, as would the Valley portions of redevelopment areas that straddle the border.

LAFCO’s report did side with Valley secession proponents in recommending that the city of L.A. obtain the consent of the new Valley city council before expanding any redevelopment project areas within the boundaries of the proposed new city during the transition period.

About Schools, Transit

By itself, breaking up the city of Los Angeles will not bring smaller, more responsive school districts or a smaller, more responsive transit system.

Public schools are run by the Los Angeles Unified School District, most buses and trains are run by the Metropolitan Transportation Authority, and the freeways are controlled by the California Department of Transportation.

None of those entities would be directly affected by Valley secession.

“It’s a misconception that’s definitely out there,” said Mara Marks, associate director of the Center for the Study of Los Angeles at Loyola Marymount University. “We have so many tasks of government under so many jurisdictions that people frequently confuse them.”

Of course, there could be indirect effects. For years, there have been efforts in the Valley to break up the LAUSD and spin off a new Valley Transit Zone from the MTA. While those efforts have been stymied, it’s conceivable that secession would re-ignite proposals to split up the LAUSD and the MTA. Even then, however, the challenges of breaking up those entities are so daunting that the elected officials who have their hands full with a new Valley city may not tackle these issues for several years, Marks said.

Only a few transit services would be affected by secession. The City of L.A.’s Department of Transportation runs short-haul shuttles in selected areas of the city, known as DASH. If the Valley were to secede, the new Valley city government would be responsible for that service. It could either continue to contract with the L.A. Department of Transportation, set up its own agency to operate the bus routes or discontinue the service entirely.

All other bus routes, including the popular Rapid Bus service, are run by the MTA and would not be turned over to a new Valley city.

Howard Fine