Los Angeles BIDs To Be Audited by the City Every Three Years According to City Clerk’s April 2016 RFQ, Published At Direction of Council. Also City to Spend $250,000 Promoting BIDs and Training BID People.

Holly Wolcott, Clerk of the City of Los Angeles
Holly Wolcott, Clerk of the City of Los Angeles
One of the advantages that zillionaires have over humans with respect to City politics is that they can hire innumerable minions to keep up with the firehose of crap spewed forth by City Hall, certainly in an effort to keep the minion-deprived majority too busy to address everything. Which is my half-serious, half-silly1 excuse for only having noticed this evening the two matters addressed in this post.

First we have Council File 14-0903, in which Holly Wolcott asked for and received an “amount not to exceed $100,000 …for a period of two years with two one-year extensions to assist with the creation and implementation and coordination of a Public Information Campaign” having to do with how fricking great BIDs are for the City of L.A. Additionally they’re getting “an amount not to exceed $150,000 … for a period of two years with two one-year extensions to assist with the creation and implementation of a capacity building and leadership training series relative to business improvement districts and create public/private partnerships with other nonprofit organizations..” None of this seems like very much money given (a) the amount of truth they’re going to have to overcome in order to achieve the first goal and (b) the amount of sheer incompetence and bloody-mindedness to achieve the second. Brace yourself for the incoming propaganda!

Second, and much more interesting, we have this Request for Qualifications, issued by the Clerk in April 2016 asking for people to submit proposals to audit BIDs. There must be a council file associated with this item, but I can’t locate it. Here’s some background. First of all, the standard contract that BIDs sign with the City allows the City to audit BIDs at will.2 This is rarely done. In fact, as far as I can tell, it has only happened twice, both times in 2005, when then-Controller Laura Chick audited both the Central City East Association and also the Westwood Village BID. The details of those audits are worth reading, although I’m not going to write about them tonight.3 However, Controller Chick made some observations then that are still relevant today:

These audits further raise questions about the City’s responsibility and ability to oversee and monitor the services provided by the BIDs. The City Clerk, on behalf of the City is responsible for ensuring that services are provided and terms of the contract are met. My audits show that they have not been given the authority or the tools to discharge that responsibility efficiently and effectively.

First and foremost, the executive directors and boards that manage the City’s BIDs have a fiduciary responsibility to ensure that services are delivered in a timely and cost effective way. These audits reveal problems with the manner in which the executive directors and boards are meeting this basic standard so integral to the success of Business Improvement Districts.

Well, obviously none of Chick’s specific recommendations regarding this were ever implemented, but maybe that’s what’s happening now. In the April RFQ we can read that:

Each administrative contract
[to administer a BID] includes an auditing component in which the operations of the organization are available for full review by the City in accordance with its contractual obligations. However, the Neighborhood and Business Improvement District Division does not have comprehensive auditing expertise for independent audits of each individual organization with the growing Business Improvement District Program. The City Council has requested that each District be audited at least once every three years. Therefore, the City Clerk will contract for auditing services as resources or funding permit for auditing.

They’ve been running BIDs for 20 years now. Laura Chick told them to audit the damned BIDs 11 years ago. And it’s just in April 2016 they admitted that they don’t know how to audit the BIDs? Well, better late than never, I guess. Given the degree of snuggly connivance and regulatory capture that exists between the Clerk’s office and the BIDs it’s hard to imagine this program having the teeth it needs, although maybe it will4 given the two facts that the auditors are independent of the City and that the auditors are being asked to

[c]onduct financial and performance audits, in accordance with generally accepted auditing standards, of the financial records of the established Business Improvement Districts; To determine if the financial operations of the established Business Improvement Districts were properly conducted according to generally accepted accounting procedures and the funds provided from assessments were kept separate and only used for the specific Business Improvement District purposes, with supporting documentation for expenditures (e.g., invoices and receipts) or reconciliation with the contract.

I suppose we shall see what happens. The BIDs are fiercely opposed to any manner of oversight at all, and have flipped out to an extent that wouldn’t be believable absent the fact that it actually happened any time even the most minimal oversight has been proposed. So we’ll see how they like getting audited every three years. I have plenty of stuff for these auditors to look in to once this all gets started. More news as I get it, as always.

Image of Holly Wolcott is a crop of a public record that I found here.

  1. Actually only about 20% silly.
  2. See Section 7, page 6.
  3. Other than to say that the CCEA has not improved since 2005. In fact things have gotten much worse over there. I hope to be able to write about this extensively at some point.
  4. I’m not yet completely cynical, although I’m not sure why I’m not.

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