So it turns out that a major scandal involving a business improvement district has been brewing up in Burbank since September 2016. The short version of the story is that a Burbank BID violated the Brown Act and may have violated State laws forbidding the use of public funds in political campaigns. A local activist, David Spell, turned them in to the LA County DA and the Fair Political Practices Commission.1
In December 2016 the Burbank City Attorney published a fascinating report on the episode,2 which may shine a great deal of light on the legal status of BID assessments as public funds. Furthermore, Spell called for the Burbank City Council to hold a disestablishment hearing as required by Streets and Highways Code §36670(a)(1).3
If this money does turn out to be public, a lot of really interesting consequences would ensue, which is another part of what makes this episode so important. As always when BIDs and the law intersect, the details are unavoidably technical, which is no doubt why the L.A. Times skips over them and also why I’m hiding them below the fold!
The BID involved is a tourism BID known as the Burbank Hospitality Association.4 Tourism BIDs are a third kind of BID authorized in California, along with property BIDs and merchant BIDs, by the Property and Business Improvement District Law of 1994. The only difference between these and the two with which I’m more familiar is that, I believe, tourism BIDs don’t have to occupy a contiguous geographical district and they consist of assessments levied against only tourism-associated industries. In the case of Burbank, this seems to mean only hotels.
Other than that, though, they seem to be subject to the same set of requirements as more familiar5 types of BIDs. Famously among these is the requirement for their governing bodies to comply with the Brown Act, imposed by the PBID law at §36612. And not least amongst the many treasures to be found therein is our old friend §54954.2(a)(3), which states unequivocally that: “No action or discussion shall be undertaken on any item not appearing on the posted agenda.”6
Now we have to review some recent Burbankian political history, which was all over the news at the time, but how memories will fade. It seems that in the Fall of 2016 the people of Burbank were hotly engaged in a debate over whether to expand their quaint little airport7 And in 2016 we were still living in a democratic state mostly, which is why the question went before the Burbankian electorate in the form of Measure B.
And now the story can begin! It seems that the Burbank Hospitality Association held a meeting on September 14, 2016. At this meeting, during the public comment period, local zillionaire, former chair of the Burbank Chamber of Commerce, unsuccessful candidate for 43rd Assembly District repster, and target of an investigation for election fraud by the LA County District Attorney8 Sunder Ramani spoke up and … well, you can take a look at the minutes for yourself:
Sunder Ramani, attended the meeting to represent the ‘Committee for Yes on Measure B,’ a community initiative to educate the public on the importance of voting yes on Measure B during the November 8 th election ballot. Mr. Ramani stated that the purpose of the initiative was to reach the 24,000 absentee voters of Burbank and educate them on the facts of Measure B. Mr. Ramani requested a financial contribution of $50,000 from the BHA which would help create and distribute mailers for this initiative. Since Mr. Ramani attended the meeting and spoke during Public Comment, the item was not on the agenda. The Board decided to further discuss and vote on the item under “Ongoing Operational Issues.”
So their tactic was to pretend this off-agenda item actually came under the heading of some already-agendized item. This is stupid, but it’s an open question as to exactly how stupid it is. Perhaps the Board didn’t even know about §54954.2(a)(3) and just moved Sunder Ramani’s request over to ongoing operational issues because they had to put it somewhere. This would be a moderate level of stupidity.
I mean, it’s still stupid, because the Board has to know that they’re subject to the Brown Act, and it’s not like this is some super-obscure provision. It’s actually one of the main things that the Brown Act is meant to prevent. But on the other hand, the Board is full of zillionaires, and zillionaires tend to think that the law9 exists entirely to serve their interests. Any that’s a wrong belief, and an evil belief, but it’s not a stupid belief, because it’s correct. This particular law just happens to be in the other .
But maybe it was really stupid. Like maybe the Board knew about the Brown Act’s mandate and thought they’d found a loophole. If so, this would be stupid beyond the level of stupidity to which one expects grownups to sink.10 The reason is simple. Politicians are all a bunch of sneaky underhanded finks, or most of them, anyway, not to mention the fact that most of them are lawyers. They look for loopholes because that’s just what they do, like the scorpion on the back of the frog.
They even hire people to look for loopholes for them, like City Attorneys and freaking Michael Colantuono and his minions.11 And the Brown Act was written specifically to control and limit politicians. It’s been amended every time a new loophole was discovered, and this has been going on since 19-freaking-53. At this point there is effectively zero chance that anyone’s going to come up with a new loophole, and if anyone does, it’s going to be a professional, not a bunch of amateurish zillionaires half-assing their way through yet another BID meeting.
So if they really thought they were going to get away with anything here, they’re really, really, really stupid. Anyway, whichever it is, we’re never going to know at this point. Fortunately the answer to this supplemental question doesn’t matter much for the integrity of the narrative! In fact, they went ahead and did what they said they were going to, and so, back to the minutes, where we find, under the heading Ongoing Operational Issues, the following bit of business:
Lucy Burghdorf, Director of Public Affairs and Communications for the Hollywood Burbank Airport recused herself from any discussion regarding the vote for the ‘Committee for Yes on Measure B’ initiative presented during Public Comment. Understanding the importance of a new modernized terminal and the positive impacts the new airport would have on enhancing tourism, The BHA voted to approve the $50,000 contribution. Mr. Garibian made a motion to approve, second by Mr. Khan, with one abstention from Lucy Burghdorf.
Now, this is obviously, clearly, glaringly a violation of the Brown Act. And, fortunately for the City of Burbank, they have people over there who are paying attention to this kind of thing. In particular, local activist David Spell, who also runs the Burbank Viewpoints blog, evidently turned the BHA into the Public Integrity Division of the Los Angeles County District Attorney‘s office. Unfortunately, at least according to Spell’s invaluable September 2017 update on the matter, although the DA found that the BHA had indeed violated the law, they declined to take action because of the Brown Act’s strict time limits.
I don’t have access to a copy of the letter that the DA sent Spell, but it appears from the tiny clipping he published and from this story in the Times that he missed a thirty day deadline. Of course, if you follow the blog, you know about the Brown Act’s ninety day deadline, afoul of which I fell in my report to the DA about the egregious Brown Act violations of the Los Feliz Village BID. The difference seems to be found in the depths of §54960.1(c)(1), which states:
The written demand shall be made within 90 days from the date the action was taken unless the action was taken in an open session but in violation of Section 54954.2, in which case the written demand shall be made within 30 days from the date the action was taken.
And of course §54954.2 is precisely the section that they violated. So that’s the story of that. However, there’s an even more interesting aspect to this story, hinted at above in the headline. It seems that Spell also reported the BHA to the Fair Political Practices Commission for using public funds in an election. The law in question is an extremely important one, and completely new to me, but bound to be useful in the future. It’s found Government Code §54964.5(a), which states in pertinent part:
A nonprofit organization or an officer, employee, or agent of a nonprofit organization shall not use, or permit another to use, public resources received from any local agency to make a contribution or expenditure not authorized by law.
Where “contribution or expenditure not authorized by law” seems to my amateur eye to refer back to the section immediately prior, which is §54964(a), which states:
An officer, employee, or consultant of a local agency may not expend or authorize the expenditure of any of the funds of the local agency to support or oppose the approval or rejection of a ballot measure, or the election or defeat of a candidate, by the voters.
The complaint is described with the usual newspaper vagueism in this Times article. It appears that it, although now more than fourteen months old, is still pending. For our purposes, though, the most interesting thing about it is that the allegation moved the Burbank City Attorney to issue this December 2016 report on the matter.
The report addresses all aspects of the BHA’s shenanigans, but, for our purposes, most important, is the question of whether the BID assessments are public funds or not. This is worth quoting at great length, as the consequences no matter which way this still judicially-unaddressed question is decided are monumental, and the Burbank City Attorney really cuts the matter at the joints:
The relevant statute is Government Code Section 54964.5, which is specific to nonprofit organizations. The statute prohibits the use of public resources for campaign activity not authorized by law. The law is enforceable by the State Attorney General or District Attorney. There is no case interpreting this section. The Epstein case (cited in footnote 1) contained dicta that the assessments in that case were public funds. But stating that funds are public begs the question of whether the funds in a certain scenario are public resources under the statute. The statute defines ‘Public resources’ as any property or asset owned by a local agency, including, but not limited to, cash, land, buildings, facilities, funds, equipment, supplies, telephones, computers, vehicles, travel, and local government compensated work time that is provided to a nonprofit organization, except funds received in exchange for consideration for goods or services. And excludes incidental or minimal use of public resources from the definition of campaign activity.
One could argue both sides of the issue. On one hand, the argument is that TBID assessments are not assets owned by the City since the funds are held in trust for the TBID. And under BID Law, upon expiration of a district remaining revenues may go back to the assessed businesses; and not to the City (Streets and Highways Code §36671). Therefore, the argument concludes that use of the assessment funds is not subject to this Government Code prohibition (although the donation, as explained above, was not in conformance with the Plan). The opposite argument is that since the assessments are levied by the City, the City through the BID Law dictates use of the funds by approval of a management district plan, and thus City controls the funds. Therefore, the funds are owned by the City and are a public resource. Ultimately, either the courts or legislature will settle this question.
OK, good Lord, this post is getting to be way too long and I haven’t even addressed the issue of disestablishment, let alone the reasons why a determination that BID assessments are public funds would be so important. I think I better make this part one and get back to the issue soonest, but no later than the end of this week. Subjects to be discussed in part two:
- Importance of determination that BID funds are public resources.
- Calls for disestablishment of BHA and associated legal issues.
- Colantuono and friends being BHA’s lawyers
Image of David Spell is ©2018 MichaelKohlhaas.Org and is kind of klopped up out of a screenshot from this worthy video and this freely licensed Burbank City Hall. Use it only for good and not for evil, friends!
- Some aspects of this story have been reasonably well-covered in the L.A. Times, and it’s probably useful to read about it there as well:• Complaint alleges public funds were used to pay for pro-Measure B campaign mailers • FPPC investigating alleged misuse of public funds by Burbank Hospitality Assn. • Burbank Hospitality Assn. violated Brown Act, D.A.’s office says • Burbank approves new regulations for tourism board
- Some selections are transcribed after the break, but the whole thing is definitely worth reading.
- And thereby granted some legitimacy to our infamous theory about how to destroy BIDs in California, presented here in June 2016 and widely reviled by the BIDdies and their co-conspirators ever since.
- Interestingly, I only found out about this whole mishegas because, after yesterday’s post on the insidious resurgence of the Echo Park BID with some hitherto-unknown-to-me outfit called Civitas Advisors as the BID consultant, I was doing a little light Googling on Civitas Advisors and, more crucially, its clients. This BHA crew, it seems, is one of them. Since it’s local I thought I’d look into their meeting schedule and so on maybe with the hope of gleaning some info about Civitas, or at least getting some ideas about how to get some info via the CPRA. Then I stumbled across the story told in this post, which is both fascinating and monumental!
- To me.
- It’s our old friend because BIDs in Los Angeles will violate this little mandate basically at will. The most recent example I have is the Central City East Association, which runs the Downtown Industrial District BID, which flouted this rule on frickin’ camera with eager abandon in February.
- Which, interestingly, is no longer named after Bob Hope. We have opinions on many things here at MK.Org, maybe even too many. But we don’t have an opinion on this. The guy was moderately funny in his movies, and he seemed to really like singing before soldiers, which I guess is good, but in his personal life he was almost certainly a creepy asshole like his wingman Der Bingle. But they don’t name airports after people on account of their being really nice people, mostly. Not that I have any idea how they choose the people they name airports after. Like I said, no opinion.
- The investigation was eventually closed with a resoundingly exonerativish finding of “insufficient evidence to further pursue.”
- And the prophets, for that matter, but such a discussion is beyond the remit of this blog.
- Or rise; I can never get that straight.
- I haven’t written much if anything about these people yet, although Colantuono himself earned a minor namecheck in this blast from the past from April 2016. But they’re an exceedingly interesting firm, about whom I will have much to say in the nearish future, and they play a role in this very tale, to be revealed later on downscreen. The TL;DR about them is that if Satan was allowed to hire a lawyer every time the Catholics brought in an exorcist, the lawyer would come from this firm. No such a civilized arrangement has yet been negotiated, so Colantuono and friends are keeping a razor’s edge on their reeking blood-soaked talons by representing business improvement districts and other maleficent spirits. Come to think of it, they’ve done so much of this that at this point they may well have become overqualified for those notional Satan/Exorcist gigs. Uneasy is the head that wears Satan’s Jewelled Crown, after all, and Colantuono and friends seem to have learned how to earn a good living maintaining the uneasiness at a manageable level…for now, anyway. These kind of arrangements are always shakier than they appear to be.