Valley Secession Likely to Spark Legal Squabbles

By HOWARD FINE

Staff Reporter

With a Valley secession measure likely to be on the Nov. 5 ballot, it's time to bring on the lawyers.

The veiled threat made by L.A. Mayor James Hahn last week to file suit if the Local Agency Formation Commission votes this week to place secession on the ballot is only the beginning. There's a host of contentious issues that could end up in the courts, both before the vote, and assuming voters approve a breakup for several years afterward.

"If secession is approved, litigation over secession issues will last for years," said Erwin Chemerinsky, professor of law at the University of Southern California who chaired one of the commissions that revamped the city charter three years ago.

All these challenges, if actually mounted, could serve to delay the secession process. If any of the threatened suits against LAFCO are filed before the Nov. 5 ballot measure, there could be legal rulings that force a delay in the vote, possibly to next March or beyond.

Disputes that go to litigation following passage of secession could grind much of the process to a halt for months or even years as legal issues are sorted out. However, Chemerinsky says these disputes would be unlikely to overturn secession altogether, although there is no legal precedent of a city breakup of this magnitude to draw from.

"I don't think litigation would invalidate a vote for secession, but I do think there will be issues that will take years to resolve," Chemerinsky said.

The most immediate issue is the amount the new Valley city would have to pay each year to ensure that the City of Los Angeles does not suffer a net loss in revenues if the Valley were to secede.

LAFCO put the figure at $56 million a year, slightly less than the $67 million put forward by secession proponents. The city of L.A. initially set the "alimony" figure at nearly $300 million and last week revised it downward to $153 million a year.

The remaining $98 million gap between the LAFCO and city figures is one of the core issues that Hahn said last week made the LAFCO proposal "unacceptable and unlawful," and would be at the forefront of any lawsuit the city would file.

In an attempt to negate that gap, the City of L.A. has reinstated its demand that the new Valley city pay compensation for L.A. city assets it assumes, like police stations, libraries, the newly refurbished regional city hall in Van Nuys and other municipal facilities. Previously, the city of L.A. had agreed to transfer most assets without compensation, except for Van Nuys Airport.

Pro-secession forces, led by Valley VOTE, the secession organizing group, adamantly oppose paying compensation for assuming ownership of these assets, claiming taxes paid by Valley residents helped pay for them in the first place.

Power source

City officials also take issue with LAFCO's recommendation that the L.A. Department of Water & Power charge the same rates to residents and businesses in the new Valley city. (Because of the prohibitive costs involved in building a new water or power infrastructure, it's assumed that the LADWP would continue to serve residents and businesses in the Valley after secession takes place.)

Essentially, this is a sovereignty matter. The DWP's charter is to provide adequate and reasonably priced water and power to residents of the City of L.A.; city officials argue that the charter does not extend to those outside the boundaries of the city. During the energy crisis, the DWP charged higher rates for excess power it sold to the statewide power grid.

Valley VOTE, however, has obtained a ruling from the County Counsel saying that LAFCO has the authority under the state Constitution to order the city to charge the same rates to Valley residents as it does for city residents.

"The city is arguing that its own city charter should prevail, while Valley VOTE and LAFCO contend that the state constitution trumps the city charter," said Raphael Sonenshein, professor of political science at California State University Fullerton and former executive director of one of the L.A. city charter reform commissions. "That's the kind of sovereignty dispute that's quite likely to end up in the courts."

While most of these matters involve disputes between the City of L.A. and LAFCO, and could be subject to litigation before the Nov. 5 election, other issues are likely to come up after the vote.

Probably the biggest sleeper issue is what happens to existing city ordinances as they transfer to the new city. Valley VOTE president Jeff Brain said the new Valley city would incorporate with all the laws governing the rest of the City of L.A. But challenges are likely to arise as these ordinances are transferred.

"This is an incredible Pandora's Box," said Fernando Guerra, director of the Center for the Study of Los Angeles at Loyola Marymount University. "The billboard industry, for one, would certainly challenge the carrying over of the recently enacted ban on new billboards to the new city. And there are dozens more ordinances that could be challenged by all sorts of interests."

Brain said that such challenges are no more likely than opposition to ordinances in the rest of the city.

Pensions and benefits

Another contentious issue is likely to be pensions and benefits for city employees, particularly with the police and fire departments. LAFCO and Valley VOTE have cited state law that guarantees that employees will not see their benefits diminished with a transfer to the new city.

However, the L.A. city charter specifically disallows such transfers of pensions and benefits to fire and police officers who go to work for another city, setting up another sovereignty dispute.

As for other debts and liabilities, LAFCO has proposed that the new city be liable for about 30 percent of those costs, a figure proportionate with the contribution of Valley taxpayers and ratepayers to the city's general fund. Brain said the new city would continue to honor its percentage of liabilities for the Los Angeles Police Department Rampart scandal and workers' compensation claims for city employees, as well as bonds sold for projects like the L.A. Convention Center.

But this issue could get caught up in the debate over the transfer of assets, as the City of L.A. pushes for more compensation to "keep the city financially whole" once secession occurs.

Last week, Fitch Ratings revised its outlook on $765.5 million in City of L.A. "AA"-rated general obligation bonds and $74.8 million in "AA-"-rated judgment obligation bonds to Negative from Stable over uncertainty in the ability of both a new Valley city and L.A. to meet existing debt obligations.

Finally, on redistricting, the California Latino Redistricting Coalition has threatened to sue the new Valley city and to bring in the U.S. Department of Justice if the new council districts in the Valley are not redrawn to increase the number of seats with solid Latino majorities. Alan Clayton, the coalition's research chairman, has said the current proposed districts only guarantee solid Latino majorities in two of the 14 districts.

But Valley VOTE's Brain said his group is working to resolve this dispute and has agreed to make changes in the lines for at least two of the districts in an effort to increase Latino representation on a new Valley city council.

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