Privatization of Some L.A. City Operations Urged

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The city of Los Angeles should consider privatizing dozens of major operations, including Ontario International Airport, according to a report commissioned by the office of City Controller Laura Chick and released on Monday.

The privatization would generate revenue for the city in the face of current and projected budget deficits in the hundreds of millions of dollars.

The report, which Chick commissioned from L.A.-based Public Financial Management Inc., recommended that the city privatize operations in nine broad areas, including animal shelters and city-owned golf courses. The report also proposed joint development with private partners of vacant or underutilized city parcels.

The report identified privatization of Ontario International Airport as the item that could generate the most revenue for the city. Also on the potential privatization list: some residential solid waste collection, operation of the Hyperion Waste Water Treatment facility, fleet maintenance services and joint development of some underutilized city parking facilities.

In a letter to Mayor Antonio Villaraigosa and the City Council prefacing the report, Chick wrote, “The cost of delivering essential services keeps growing at a rate that exceeds the city’s ability to generate revenue, and is a major reason we’ve had a structural deficit for years now. When it comes to looking at how the city can fulfill its obligations to the public, and pay for it, no subject should be taboo.”

Privatization of city services is not unprecedented. Private contractors manage scores of operations for the city, such as street repairs. Also, the city entered a public-private partnership arrangement with TrizecHahn Inc. to build the Hollywood & Highland shopping center.

There have been several previous attempts to privatize more city services, particularly during the administration of former Mayor Richard Riordan. Those attempts met with stiff opposition from public employee unions. As a result, only a fraction of the additional services recommended for privatization were ever implemented. Similar opposition is expected to many of these recommendations.

“I know that many suggestions in this report will touch a nerve with the good men and women that work for our city and their union leadership,” Chick wrote. “That is why the report calls out that any steps, must include, at the front end, labor as a partner.”

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Howard Fine
Howard Fine is a 23-year veteran of the Los Angeles Business Journal. He covers stories pertaining to healthcare, biomedicine, energy, engineering, construction, and infrastructure. He has won several awards, including Best Body of Work for a single reporter from the Alliance of Area Business Publishers and Distinguished Journalist of the Year from the Society of Professional Journalists.

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