You may recall that late last year, on the basis of my complaint to the Police Commission, the City of LA resumed enforcement of LAMC 52.34 against BID security forces.1 Since then it’s been possible to track the progress of this massive project via various CPRA requests. So in November 2016 the Police Commission informed all BIDs of the registration requirement and, at the same time, told them that their BID patrollies would be subject to arrest if they didn’t submit. In December 2017 the Police Commission told the BIDs to quit whining about it because the law is the law.
The Fashion District BID in Downtown Los Angeles is set to expire at the end of 2018. This means that they’ll be collecting petitions roughly in the first quarter of 2018 and going to City Council approximately in the Summer of 2018. The process is complicated for property-based BIDs and usually requires a consultant, and the consultant has to start early. The Fashion District is using Urban Place Consulting.1 Work began on the process in January 2017.
Thanks to the competence, kindness, and evident commitment to transparency of the Fashion District BID’s executive director, Rena Masten Leddy,2 we have copies of (at least most of) the FDBID’s contract with UPC3 as well as the first three months worth of invoices. You can get these:
Crucially, the contract reveals that the Fashion District will pay UPC more than $55,000 over the course of the two year process. The contract is supposed to include a schedule of hourly rates and the invoices are supposed to include an hourly breakdown, but, at least so far, they do not.
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:
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.
ADOPT the attached Annual Planning Report for the East Hollywood Property Business Improvement District’s 2015 fiscal year, pursuant to the State Law.
This turns out to be a huge problem for a number of unrelated reasons. First and most simply, the CCEA is a nonprofit 501(c)(6) organization. Unlike the more famous 501(c)(3) organizations, 501(c)(6) groups are allowed to engage in lobbying, but it’s unclear whether they’re allowed to support candidates for office.1 However, irrespective of any restrictions on donations, there are very clear reporting requirements.
Take a look at the CCEA’s 2015 tax form. In particular, take a look at question 3 of part IV, found on page 3 of the form. It asks unambiguously:
Did the organization engage in direct or indirect political campaign activities on behalf of or in opposition to candidates for public office?
And, as you can see in the image that appears somewhere near this paragraph, the CCEA unambiguously stated that they did not. It’s hard to imagine a less ambiguous form of direct political campaign activities than giving actual money, amirite? Hence I turned them in to the IRS and also to the Franchise Tax Board for this lacuna. Stay tuned in case anything happens!
Earlier this week, not-so-shadowy BID consultant Susan Levi, who among other things serves as the Executive Director of the South Los Angeles Industrial Tract BID, sent me a copy of the SLAIT BID’s transactions by vendor from January 2013. The most interesting item, or at least the item I’m presently most interested in right now, appears on page 3, under “Edward Henning & Associates.” Edward Henning, of course, is a consulting engineer and seems to have made something of a career of preparing the engineering reports which are mandated by the Property and Business Improvement District Law of 1994 at §36622(n) for BID establishments.1 A little arithmetic reveals that the SLAIT BID paid Henning $9,000 for their 2015 renewal. This is roughly 10% of the approximately $80,000 which the consultant seems to earn. There’s no moral to this story, at least not yet. It’s merely the latest datapoint I’ve collected in my attempt to understand the finances of BID establishment and renewal.
Perhaps you remember the long and winding narrative of how I spent almost half of last year trying to get the City Clerk’s office to cough up mailing addresses for the property owners in the Venice Beach BID, which they finally did do. There is a reasonable summary with links right here. Today I can reveal a little behind-the-scenes episode in that story.
A few weeks ago, in the middle of about a thousand pages of emails that the City Clerk’s office finally handed over, only about six months after I asked for them, I found this little gem of an email chain. Most of it is me hassling various Clerk staffies for the list of addresses, but right in the middle of it all, there’s an interlude between Holly Wolcott and Deputy City Attorney Mike Dundas, who’s evidently some kind of CPRA specialist over there in City Hall East.1
There’s an unresolved problem in the application of the California Public Records Act to business improvement districts. The thing is that the Property Owners’ Associations which administer the BIDs are, in part, subject to CPRA because §36612 of the Property and Business Improvement District Law of 1994 makes them so, stating that:
“Owners’ association” means a private nonprofit entity that is under contract with a city to administer or implement improvements, maintenance, and activities specified in the management district plan. … an owners’ association shall comply with the California Public Records Act … for all records relating to activities of the district.
The problem is that the Owners’ Association doesn’t seem to be required to comply with CPRA until it actually is under contract with the City. This, if accurate, means that the activities of the POA before the BID is approved are largely opaque to scrutiny. And this has been a severe problem in the case of the Venice Beach BID, where a number of people, not just me, have had the experience of CD11 staff,1 City Clerk staff, and even freaking Holly Wolcott herself, falsely denying that the City is involved in the BID formation process at all and telling members of the public that they should therefore seek information from shadowy BID consultant Tara Devine. Tara Devine, of course, ignores all requests for information from anyone who seems to be even a little skeptical about the benefits of BIDs.
None of this is the final word on the matter. The only reason that the legislature even made BIDs subject to CPRA is that Aaron Epstein, a brave and determined property owner, sued the living shit out of the Hollywood Property Owners Alliance2 in the 1990s and the Courts determined, in a stunningly righteous decision, that BIDs were subject to both CPRA and the Brown Act. It’s quite possible, perhaps even probable, that if the courts were asked whether or not POAs were subject to CPRA before the contract was signed, they would find that they were. However, that’s not a struggle in which I presently have the resources to engage, so alternative methods of information collection are required.
Chapter 2 of that law describes the process for establishment and renewal of a BID,2 and it’s remarkable how tentative, how conditional the process is. It’s well-known by this point that in order for a BID to be formed it’s necessary that property owners representing more than 50% of the assessed value be in favor.3 It’s necessary, but it by no means sufficient. Section 36625(a) very clearly leaves the question of formation up to the Council:
If the city council, following the public hearing, decides to establish a proposed property and business improvement district, the city council shall adopt a resolution of formation…
The only mandatory requirement with respect to BID establishment in the whole Chapter is found in Section 36623(b), which says that if owners holding 50% or more of the assessed value are opposed to the BID, not only can it not be formed, but no further attempts can be made to form it for a year.
And the discretionary nature of the process is reflected in the City’s BID Policy and Implementation Guidelines as well. Therein it states:4
The City Council can proceed with the BID if the protest is less than 50%. However, BID proponents are cautioned that they should not expect a favorable vote from the City Council with a significant number of protests.
From the context it’s clear that the policy means that there is some threshold of protest less than 50% with respect to which the Council will not establish the proposed BID even though the Property and BID Act would allow them to do so.
Today I have two new sets of documents to announce. First, the South Los Angeles Industrial District BID recently dropped Universal Protection Service1 as its security provider and hired StreetPlus to replace them. This seems to be a trend amongst our LA BIDs, probably encouraged by the fact that unlike UPS and Andrews International, StreetPlus specializes in BID security rather than security in general.
Other recent switchovers are the Downtown Center BID, the Historic Core BID, and both South Park I and II. Also the HPOA switched its cleaning contract to StreetPlus last year. This company is turning out to be a crucial player in the LA BID game, so I’ll be focusing some attention on them from now on. The first fruits of this are the 2016 proposal and resulting contract between StreetPlus and the SLAIT BID. There are some ancillary materials included there as well. This material is not only intrinsically interesting, but it has a lot to tell us about security in other BIDs. There’s some discussion and some more links after the break.
Also, I have 29 emails between Lisa Schechter of the Hollywood Media District BID and Kerry Morrison/Devin Strecker of the HPOA. These are mostly negatively interesting for their extreme lack of content. I’m guessing this is due to them switching as much of their communication as possible to phone calls and other off-the-record media. This, in turn, demonstrates, I’m still guessing, the feeling that my constant CPRA requests have engendered amongst local BIDs that they are operating in a minefield.
One of the purposes of these reports is to keep the City updated on what the BID plans to do during the new year. In particular, at §36650(b)(2) the law states:
The report shall be filed with the clerk and shall refer to the property and business improvement district by name, specify the fiscal year to which the report applies, and, with respect to that fiscal year, shall contain all of the following information: … The improvements, maintenance, and activities to be provided for that fiscal year.
So for instance, the Media District’s plan explains what they’re going to do about cleaning and security, which are two of the core functions of BIDs. Here’s part of their statement on cleaning:
Other expenditures anticipated include tree trimming, purchase of additional trash receptacle, and other similar projects to beautify the District in accordance with the approved Management District Plan.
And part of their statement on security:
Safe Committee meetings address a full range of issues: loitering, public urination, drinking in public, prostitution, vandalism, graffiti, and quality of life issues.