It Appears That East Hollywood BID Director Nicole Shahenian Lied To Los Angeles City Clerk Holly Wolcott About The Circumstances Of The Preparation Of The EHBID’s 2015 Annual Planning Report And, As Shahenian Was A Registered Lobbyist At The Time, Thereby Violated LAMC 48.04(B)

Nicole Shahenian, you got some splainin’ to do!
The background to this post is unavoidably technical and lengthy. If you’re already familiar with the Annual Planning Report process for BIDs as mandated by Streets and Highways Code §36650, you may want to skip directly to the report I submitted to the City Ethics Commission this morning.

One requirement that the Property and Business Improvement District Law places on BIDs, found at §36650, is the submission of annual planning reports (“APRs”) to the City Council:

The owners’ association shall cause to be prepared a report for each fiscal year, except the first year, for which assessments are to be levied and collected to pay the costs of the improvements, maintenance, and activities described in the report. … The report shall be filed with the clerk … The city council may approve the report as filed by the owners’ association or may modify any particular contained in the report and approve it as modified.

And it seems that the BID isn’t allowed to spend money on stuff that’s not discussed in the APR, so it’s not a trivial matter.

The way this piece of code plays out in Los Angeles is that, first, a BID director submits the APR to the Clerk along with a formulaic cover letter. For instance, here is the one submitted by Nicole Shahenian on December 30, 2014 to accompany the East Hollywood BID’s APR for 2015. This is essentially the same letter submitted by all BIDs:

Dear Ms. Wolcott:
As required by the Property and Business Improvement District Law of 1994, California Streets and Highways Code Section 36650, the Board of Directors of the East Hollywood Business Improvement District has caused this East Hollywood Business Improvement District Annual Planning Report to be prepared at its meeting of December 29, 2014.

And don’t forget that state law requires the City Council to adopt the report either with or without modifications. In Los Angeles this part of the process is initiated by the Clerk sending another form letter to City Council, recommending that they adopt the BID’s APR. It’s my impression that the Clerk doesn’t recommend modifications to the report at this stage. These seem to be handled by Miranda Paster before the APR is submitted to Council, as in this example involving the Media District BID. Anyway, take a look at Holly Wolcott’s January 14, 2015 recommendation to City Council with respect to the East Hollywood BID’s APR. Like every such document, this states:

The attached Annual Planning Report, which was approved by the District’s Board at their meeting on December 29, 2014, complies with the requirements of the State Law and reports that programs will continue, as outlined in the Management District Plan adopted by the District property owners.

And it goes on from there to recommend:

That the City Council:

  1. FIND that the attached Annual Planning Report for the East Hollywood Property Business Improvement District’s 2015 fiscal year complies with the requirements of the State Law.
  2. ADOPT the attached Annual Planning Report for the East Hollywood Property Business Improvement District’s 2015 fiscal year, pursuant to the State Law.

  3. But there are a number of problems with this story. First, it appears that the East Hollywood BID Board of Directors did not actually meet on December 29, 2014. In fact, it appears that they did not meet at all in December 2014. Of course, it’s notoriously difficult to prove a negative, but I’m going to give it a go.

    Take a look here at the East Hollywood BID minutes for November 12, 2014. There are two salient points. First of all, there is no mention of the 2015 APR. Second, the minutes state that the subsequent meeting was scheduled for January 13, 2015.

    Next take a look at the Board minutes for January 27, 2015. Evidently the meeting was rescheduled from the 13th to the 27th. Also note that there is no mention here of the 2015 Annual planning report.1 I received all these minutes in response to a CPRA request some time ago, so just to be sure that I wasn’t missing an inadvertently omitted record of a hasty December 2014 meeting, on March 5 of this year, I emailed the EHBID’s attorney, Jeffrey Charles Briggs,2 asking him whether or not they’d met during that month:

    Good afternoon, Jeff.

    I’m sorry for the flurry of emails, but I just realized that I don’t have the minutes from the December 2014 meeting of the EHBID Board, if there was one (I can’t tell for sure whether or not there was from the materials I have). If there was, could I have a copy. If not, then obviously I don’t need a copy.

    Thanks for your forbearance,

    Mike

    He answered me three days later, confirming what I had believed all along:

    There was no EHBID Board meeting in Dec 2014. Consequently EHBID has no records responsive to your request below.

    Jeffrey C. Briggs, Esq.
    Briggs Law
    6464 Sunset Boulevard
    Suite 715
    Hollywood, CA 90028
    jbriggs@jbriggslaw.com
    www.jbriggslaw.com
    (323) 461-5400
    (323) 908-7275 fax
    Click here to upload encrypted files securely.
    “In Hollywood, For Hollywood”℠
    Ask me about Hollywood 4WRD and ending homelessness in Hollywood, Hollywood Central Park over the 101 Freeway, and the Walk of Fame Repair Project

    So unless there was some covert meeting of the Board on December 29, 2014, for which they prepared no minutes and which they kept secret from their lawyer, at which they approved the 2015 APR, Nicole Shahenian was lying when she told Holly Wolcott that that had happened.

    Now, to be fair, it seems that this is not a rare phenomenon. I am in the process of collecting evidence that shows that a number of other BIDs in LA have done exactly the same thing over the last few years. Somehow, BIDs seem to have gotten the idea that they don’t actually have to have their Boards of Directors prepare and approve their APRs, even though the law says they have to and they all write letters to Holly Wolcott saying that they did. I’ll be writing on this at some point when I get all the proof in one place.

    But the case of the East Hollywood BID and of Nicole Shahenian is unique for one crucial reason. Nicole Shahenian was registered with the City of Los Angeles as a lobbyist on December 30, 2014. Here is a copy of her registration form3 You can see from the form there that she qualified as a lobbyist on July 1, 2014 and registered on August 1, 2014. Furthermore, the Municipal Lobbying Ordinance at LAMC §48.07(B) states unequivocally that:

    A person who registers as a lobbyist or lobbying firm shall retain that status through December 31 of that year unless and until that person terminates the status as set forth below.

    Therefore, as I said, she was registered on December 30, 2014. Oh, and not only that, but, as I said above, the City Council has to approve APRs for them to be in force. And they do this at actual Council meetings and hear comments, and then vote. For the EHBID, these proceedings are memorialized at Council File 13-0199. The City Council adopted the EHBID’s 2015 APR on February 3, 2015, and here is a memo attesting that fact. What’s interesting here is the fact that because APRs have to go through this process, they are defined to be “municipal legislation” in the Lobbying Ordinance. The pertinent part is found at LAMC §48.02, which states that:

    “Municipal legislation” means any legislative or administrative matter proposed or pending before any agency (as defined in this article), including but not limited to those involving the granting, denial, revocation, restriction or modification of a license, permit or entitlement for use (including all land use permits) if the Mayor, the City Council, any of its committees, any agency board, commission, committee, or general manager, or any agency officer or employee charged by law with holding a hearing and making a decision, is charged by law with making a final decision on the matter.

    Thus the approval of the APR was a piece of municipal legislation under the meaning of the Municipal Lobbying Ordinance. Furthermore, not only did Nicole Shahenian tell Holly Wolcott that the EHBID’s APR was approved at a meeting that never happened, the fact that it never happened was material in relation to this municipal legislation, where “material fact” seems to be a technical legal term meaning:

    crucial to the interpretation of a phenomenon or a subject matter, or to the determination of an issue at hand

    After all, Holly Wolcott recommended that City Council find that the APR complied with state law. Obviously it didn’t comply with state law if it either wasn’t prepared by the Board of Directors or else it wasn’t lawfully prepared by them, e.g. at a non-public meeting or some other shenaniganistic setting. The knowledge that there was no meeting obviously would have been crucial to Holly Wolcott’s determination of her recommendation.

    And what would have happened if the East Hollywood BID had just failed to file their APR? Or if Nicole Shahenian had just admitted that it wasn’t prepared lawfully? Well, it’s pretty serious. The BID’s contract with the City can be found here, at C-119858 in the Council File Management System. But if you look here on page 3 you will find that the APR is required by the contract, in section 2.2:

    Corporation shall prepare and submit to the City Clerk a Planning Report for each fiscal year for which Assessments are to be levied and collected. The Planning Report shall be prepared in accordance with Section 36650 of the Act and shall contain all items required by said Section. The first Planning Report shall be submitted by December 1, 2012 and by December 1 of each subsequent fiscal year of District operations for which assessments are to be levied and collected. The District’s “fiscal year” shall be from January 1 to and including December 31. These reports are subject to review, approval and or modification by the City Council.

    And not only that, but on page 6 of the contract we learn that the clauses in Section 2 are the ones that will get the BID’s money withheld if they’re not performed:

    The City Clerk agrees to pay Corporation the amount due Corporation within twenty (20) business days of receiving said invoice, subject to Corporation’s compliance with Section 2 of this Agreement . . .

    You might remember that this was the basis of the episode last year when Miranda Paster threatened to withhold $220,000 from the East Hollywood BID because Nicole Shahenian hadn’t sent in copies of the BID’s newsletters for four years. The newsletter requirement is also in Section 2. And it wasn’t a trivial amount of money at risk in this case either. Take a look at the EHBID’s estimated 2015 revenue. It comes out to $216,742. That’s what was at risk should Holly Wolcott have discovered Nicole Shahenian’s malfeasance with respect to the APR. And lying in order to secure financial benefits is worse than just lying, at least in some contexts. Because lying for that reason is fraud.

    The staff of MichaelKohlhaas.Org submitting a report to the Ethics Commission.

    And this all adds up to a big problem for Nicole Shahenian, because LAMC §48.04(B) prohibits registered lobbyists from:

    Fraudulently deceiv[ing] or attempt[ing] to deceive any City official with regard to any material fact pertinent to any pending or proposed municipal legislation.

    And that, my friends, is why, early this morning, I fired off a complaint about Nicole Shahenian’s lawless ways to the City Ethics Commission.

    And there are even more issues to explore. For instance, take a look at LAMC §48.09(B,C). These two sections state:

    B. Criminal Penalties.
    1. Any person who knowingly or willfully violates any provision of this article is guilty of a misdemeanor. Any person who knowingly or willfully causes any other person to violate any provision of this article, or who knowingly or willfully aids and abets any other person in the violation of any provision of this article, is guilty of a misdemeanor.
    2. Prosecution for violation of any provision of this article must be commenced within one year after the date on which the violation occurred.
    3. No person convicted of a violation of this article may act as a lobbyist or otherwise attempt to influence municipal legislation for compensation for one year after such conviction.

    C. Civil Enforcement.
    1. Any person who knowingly violates any provision of Section 48.04 shall be liable in a civil action brought by the City Attorney. … If the court determines that a violation was intentional, the court may order that the defendant be prohibited from acting as a lobbyist or otherwise attempting to influence municipal legislation for one year.

    So, sadly, the statute of limitations for criminal enforcement has run out. But the civil statute has not. Also note that violations of LAMC 48.04(B) are different from most violations of the Municipal Lobbying Ordinance in that they have to be knowing violations in order to make the violator subject to a civil action. But don’t forget to read page two of Nicole Shahenian’s lobbyist registration form. Right there on the form there’s the following statement:

    I HAVE READ AND UNDERSTAND THE REQUIREMENTS OF THE PROVISIONS OF LOS ANGELES MUNICIPAL CODE (LAMC) SECTIONS 48.01 ET SEQ., AS AMENDED, LAMC SECTION.49.5.10, AND LOS ANGELES CITY CHARTER SECTION 470(c)11:

    And right underneath that appears the full text of LAMC 48.04. That is, when Nicole Shahenian filled out this form on August 1, 2014, she signed a statement agreeing that she had read and understood LAMC 48.04(B), and she signed it on a document that had the text of the law printed right on it. Now, I don’t know what it takes to demonstrate conclusively that a violation of a law was a knowing violation, but I would bet that having signed a statement on which the text of the law appears, attesting to the fact that one has read and understood the law, and has done this a mere four months prior to breaking the law would go a long way toward proving that the violation was knowing.

    You may recall, by the way, that LAMC 48.09 is the same code section on which I based a complaint against Tara Devine to Mike Feuer. This time, I opted to send the report only to the CEC but to ask them to decide if it ought to be referred to Mike Feuer. I’m not sure what the proper protocol is, so I’m just trying different ones. Most interesting thing of all about this part of this fercockt mishegoss is that, at least potentially, debarment from acting as a lobbyist is on the table as a sanction. That’d be very interesting indeed, if that happened, would it not? Of course, the Ethics Commission moves very slowly, but it does move. Stay tuned for details!


    Image of Nicole Shahenian started its life as a public record, which I obtained from Southern California Public Radio, but it’s since been so substantially transformed by my own ingenuity and so very mixed with the labor of my hand and brain that, in the Lockean sense, it has been transmutated into private property and is, therefore, ©2017 MichaelKohlhaas.Org. Disaster Girl is the property of the whole wide world by now and you can read all about it right here.

    1. These minutes are labeled “draft,” but they came to me in response to a CPRA request for all minutes. Hence it’s almost surely the case that the EHBID just forgot to remove the word “draft.” Also note that even if these minutes had contained a discussion of the BID’s APR it would have been the same as not having met, since the report was already submitted to and accepted by the City.
    2. JCB is now the attorney handling my CPRA requests for at least four BIDs: the Hollywood Media District, Los Feliz Village, South Los Angeles Industrial Tract, and, of course, East Hollywood. My research into BID expenditures suggests that he charges a flat rate of $500 per BID per month. Thus my CPRA habits are presently enriching him to the tune of at least $2,000 per month, or $24,000 per year. You’re welcome, Jeff!
    3. which can be obtained directly from the City Ethics Commission if you’re skeptical, but it’s a lot of trouble to link through to there. Go to their home page, click on “LOBBYING” in the sidebar, search for lobbyists by name. Don’t forget to change the year to 2014.
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