Editorial: Follow the Money to City Hall

By Austin Beutner and David Fleming

A mysterious developer bundles large sums of money from suspicious donors and contributes it to the campaigns of the mayor and several City Council members who then approve, over the unanimous objections of the City Planning Commission, City Hall staff and much of the surrounding community, a controversial real estate project called Sea Breeze. Tammany Hall circa 1870? A remake of Chinatown? How about Los Angeles City Hall in 2017?

Allegations of wrongdoing that surround the Sea Breeze project are serious enough to spark an investigation by the Los Angeles County district attorney.

While many of the allegations involve potential violations of campaign finance laws, what about the elephant in the corner of the room? How did Los Angeles become a place where monied developers can build whatever they want without regard to existing laws or the wishes of the community?

The math on Sea Breeze is simple. The developer’s land in L.A.’s Harbor Gateway neighborhood was worth about $17 million zoned for industrial use. He donated $600,000, got his land rezoned for residential use and, like magic, the next day it was worth $42 million. Most people have to drive to Morongo to try and turn $600,000 into a $25-million profit overnight.

Los Angeles’ outdated zoning rules and poor planning processes are at the root of this issue. State law requires cities to maintain general plans, which must be updated every five years. The Los Angeles General Plan includes 35 separate community plans that establish legal land-use parameters for the city’s neighborhoods, plus one each for the Port of Los Angeles and Los Angeles International Airport.

Unfortunately, most of these community plans have not been updated in 20 years or more. Despite City Hall’s rhetoric about zoning reform and a vision for the future, the plans remain hopelessly out of date.

What happens when Los Angeles tries to move forward with outdated plans? Requests for “updates”—zoning and planning variances—land in the hands of the 15 City Council members. They more or less have the authority to ignore the old rules and decide what projects will be built in their districts, subject to sign-off by the mayor. No project of any consequence can move forward without these approvals.

This “spot-zoning” system gives those who can afford to fill campaign coffers outsized influence over the size, shape and location of new developments in the city, with average Angelenos left out of the backroom cycle of monied interests and City Hall politicians. Is it any wonder developers are the biggest donors to City Hall?

Why is the city gifting $25 million to the Sea Breeze developer and getting back nothing, save for the $600,000 in campaign contributions to a few politicians?

The city and county are raising sales tax rates for funds to address the issues of homelessness and transportation infrastructure in our community. Both issues need to be solved, and it will cost money. But why is so much of the burden falling on the working poor? Won’t property owners benefit from better transportation infrastructure to serve their buildings, and a community with fewer homeless people? Developers already have the benefit of the bargain in Los Angeles, as real estate here is taxed at rates significantly less than comparable property in New York.

Is what happened at Sea Breeze unlawful? That’s for the DA to decide. By any moral standard, it is wrong and it’s a terrible waste of economic opportunity for the city. Let’s assume the project should have been approved on its merits and had the support of the community.

We know the developer would have paid the city at least $600,000 to get Sea Breeze approved, the same as what he gave to the politicians. But he still walked away with $24.4 million in profit, all due to the stroke of a pen in City Hall. Seems pretty obvious the city could get a better deal.

The solution to this:

• Update the city’s community plans. The city should embark on a serious effort to make sure its plans reflect the needs of a city of the future and the input of the community. This will greatly reduce the casino atmosphere in City Hall.

• Restrict the ability of developers to buy favors from City Hall. Several years ago, the Securities and Exchange Commission imposed strict limits on how Wall Street firms and their employees, family members and agents could contribute to city and state politics. L.A. should adopt the same rules and apply them to developers.

• Get a better deal from developers. The city should implement a program to capture for public coffers some portion of the value from the “up-zoning” on large, new projects. This will provide funds to address high-priority needs like homelessness and transportation infrastructure.

The Sea Breeze project and others like it should be a wake-up call. We deserve a transparent and equitable way for land-use decisions to be made in our community. And we deserve to see the benefits reinvested in city services and public infrastructure, not just the pockets of developers and their elected friends.

(Editor’s note: This article first appeared in the Jan. 22 L.A. Daily News and is reprinted here with Beutner’s permission. Fleming and Beutner (who lives in Pacific Palisades), were members of the L.A. 2020 Commission, which published a report in 2013 highlighting, among other issues, the need for development reform.)

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