It’s a long term project of mine to turn in as many BID consultants as possible to the City Ethics Commission for failing to register as lobbyists. So far, though, I’ve only managed to report Tara Devine for her work on the Venice Beach BID because the work is so involved. Such a report has two essential components:
An argument that a specific BID consultant was paid for sufficiently many hours over sufficiently few months to trigger the registration requirement found in the MLO at LAMC §48.07(A).
It occurred to me recently that the first argument will be the same for all BID consultants, and that therefore it would be possible to streamline the reporting process by writing it up in a generic format that would apply to any given BID consultant. So that’s what I did, and you can read the result here. I will be using this to make a number of complaints against BID consultants in the near future, which I will report on here.
So it seems that the Port of Los Angeles has something called a small business enterprise program, in which they “provide additional opportunities for small businesses to participate in professional service and construction contracts … in a manner that reflects the diversity of the City of Los Angeles.” (see this PDF for details).
And it also seems that the San Pedro BID contracts with the Port every summer to run trolleys around downtown San Pedro. And as part of the contract, the Port requires the BID to complete an Affadavit of Company Status. And part of the status is whether the contractor is a small business or not. As you can see from the PDF or from the image that appears somewhere near this sentence, the San Pedro BID1 claims to be a “Very Small Business Enterprise” (“VSBE”) which is an extra-small form of Small Business Enterprise (“SBE”).
Of course, with all such programs it’s important to have clear definitions, and the Port of LA has laid theirs out for all to see in the cover sheet of this certification form, which all contractors are required to fill out and submit with a notarized signature under penalty of perjury. The relevant bit for our purposes is:
The Harbor Department defines a SBE as an independently owned and operated business that is not dominant in its field and meets criteria set forth by the Small Business Administration in Title 13, Code of Federal Regulations, Part 121.
In July 2016, San Pedro Historic Waterfront BID executive directrix Lorena Parker contacted CD15 staffers Ryan Ferguson and Jacob Haik1 apparently in an attempt to have them fix pending citations and criminal charges against local property owners, possibly including BID board president Eric Eisenberg, stemming from sanitation violations involving dumpsters. You can read the details in this email chain (as always, there’s a transcription after the break).2 This episode quite possibly involves the dumpster next to the Cabrillo Hotel, the filthy state of which has been obsessively3 chronicled by Bruce Ecker at The Renaissance Dump website.
We here at MK.Org have discussed at length the much-violated requirement that business improvement districts only spend their money on activities that are approved by the City Council at the time the BIDs are established.4 These preapproved activities are enshrined in the so-called Management District Plan. The San Pedro BID’s MDP can be found here (Careful — huge PDF download). You can read it over and over again and you will find no mention whatsoever of paying Lorena Parker a salary so that she can try to get Joe Buscaino’s staff to try to make criminal charges go away.
Last month I learned that the San Pedro BID was paying Edward Henning $20,000 to handle their BID renewal process. This discovery was independently interesting, but also important for my ongoing research project of learning everything possible about BID consultancy with the ultimate goal of shopping as many BID consultants to the City Ethics Commission as possible, mostly for violations of LAMC §48.07, which requires that “[a]n individual who qualifies as a lobbyist shall register with the City Ethics Commission within 10 days after the end of the calendar month in which the individual qualifies as a lobbyist.”
In this clause, someone “qualifies as a lobbyist” when they, according to LAMC §48.02 are “compensated to spend 30 or more hours in any consecutive three-month period engaged in lobbying activities.”1 Note that today I’m mostly skipping the argument that BID consultancy qualifies as lobbying activities, but you can read about it in excruciating detail here.
Part of the evidence that I obtained last month were these two invoices from Edward Henning to the SPHWBID. As you can see, they span the time period from March 2016 through December 12, 2016 and bill for a total of 75 hours. That’s roughly 7.5 hours per month if distributed evenly across the billing period. This is not enough evidence to show that Edward Henning was required to register. In fact, if he did work about 7.5 hours a month he would not have been so required.
It’s precisely that issue that today’s document release shines some light on. The other day, San Pedro BID executive directrix Lorena Parker was kind enough to send me over 100 emails to and from Edward Henning.2 At first I thought I’d be able to pick out 3 consecutive months in which Edward Henning was compensated for 30 hours by assuming that the number of emails in a month was proportional to the number of hours worked. This didn’t pan out for a number of reasons, not least because I don’t yet have emails between Edward Henning and the City of LA that weren’t CC-ed to Lorena Parker. I can tell from internal evidence that there are some of these,3 and I have a pending CPRA request for them, but they’re not yet in hand.
A business improvement district (BID) in Los Angeles1 is a geographical area in which the owners of commercial property are assessed an additional fee for various services that aren’t provided by the City. These fees are collected either by the City of L.A. via direct billing2 or, more usually, by the County of Los Angeles as an add-on to property tax bills.
The state law authorizing BIDs requires each BID to be administered by a property owners’ association (POA).3 In the normal course of things these organizations are conjured up by the City at the time the BID is established, although sometimes previously existing nonprofits will end up as a POA. One example of this is the Hollywood Chamber of Commerce, which serves as POA for the East Hollywood BID, although it predates its existence.
Yesterday evening, BID-lawyer-to-the-stars Jeffrey Charles Briggs passed along almost 200 emails between Media District BID executive director Lisa Schechter and various people at the City of Los Angeles. These are available en masse at Archive.Org. As always, there’s a lot of chaff in there and a few super-interesting things.1 Perhaps today’s story is an example of the latter.
It began on February 28, when Rita Moreno, newly of the Neighborhood and Business Improvement Division of the City Clerk’s office, the unit that’s meant to oversee the operations of BIDs and make sure that they follow the law and stuff, emailed a bunch of BIDdies to introduce herself and note that only a few of them had their meeting times posted on their websites. Of course, the Brown Act explicitly requires BIDs to notice their meetings on their websites,2 but that’s actually not why Rita was on about this. She was just trying to find out when they met so that she could attend. In fact, it’s not even clear that Rita Moreno knew about the Brown Act requirement.
However, the very next day, our old friend Lisa Schechter of the Hollywood Media District BID, who is not generally known for her law-abiding behavior but who has by now been educated by years of our intense scrutiny to the point where, I hope, she’s beginning to realize that it’s just easier to follow the law,3wrote back to Rita Moreno, fishing for praise from this unlikely authority figure:
Just to reiterate, all of our meetings are posted in accordance with the Brown Act (Committee as well as Board) – Further you have been placed on our automatic distribution list which triggers and [sic] email directly to you for all of our meetings. If you should require any further information please do not hesitate to contact myself or our operations manager, Jim Omahen.
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!