Spend some time hanging around business improvement districts and you’ll certainly hear a bunch of entitled zillionaires whining, bragging, or lying about how they voluntarily agree to spend their own damn money to provide services that the City of Los Angeles is too incompetent, too broke, or too both of these to provide. They just love explaining this to everyone. And the City of Los Angeles is also thrilled with that narrative. This City-produced BID FAQ explains it quite clearly:
[A] majority of business owners of commercial property owners in a given area decide to acquire special benefits and to pay for those benefits themselves.
The story serves everyone’s interests. The BIDdies get to imagine themselves as heroes of putative private sector efficiency and the City gets a bunch of useful idiots to carry out policies that would be incredibly illegal if the City did them directly. Everybody wins but the citizens of Los Angeles. The part you don’t hear too much about, though, the part that none of them really like to discuss, is that when property owned by the City or by other public agencies is included in a BID then the City or the other public agency is also subject to these assessments.
This is specifically authorized by the Property and Business Improvement District Law under which BIDs are established in California.1 This means that when the City Council approves a business improvement district it’s often also approving an ongoing annual payment to the BIDdies. Which, by the way, can be substantial. Over the last few days I looked at various public records involved in BID formation in LA and learned that the City of Los Angeles is on the hook for annual payments to BIDs of at least $2,278,604.2
If LAUSD, Metro, and the County are included the total is $3,710,281 and property owned by the State of California brings the total amount of public money paid annually to LA BIDs to $4,203,276.3 These days, with the City of Los Angeles furloughing employees and moaning about the price of hotel rooms to protect unhoused residents from the ongoing pandemic, there are much, much better uses that that money could be put to.4
I obtained these figures from the engineer’s reports, required by the PBID law as part of the BID formation process5 and they are certainly low, in some cases very, very low. The reports only give the annual assessments in the year of formation, but BIDs have the power to unilaterally increase the amount by up to 5% per year. Some of the reports are close to ten years old at this point, although others are from this year and there’s no easy way to figure out an accurate total amount right now.6
But I extracted all the relevant figures from the reports and put them into a spreadsheet, which you can get a copy of from Archive.org as an OpenDocument file, or Excel, or PDF. It’s interesting to match up BIDs, Councilmembers, and payouts. Just for instance, Mitch O’Farrell of CD13 has three BIDs in his district: Hollywood Media District, East Hollywood, and the Hollywood Entertainment District.
It’s hard not to see this money as some kind of payback from O’Farrell to the commercial property zillionaires who run the BIDs. And it’s true that the LA City Council, and therefore O’Farrell, have only limited control over LAUSD and Metro.10 But it’s still within O’Farrell’s power to stop the waste of more than just the $257,385 paid by LA City departments.
The Council controls every aspect of BID formation and operation. They could easily require BIDs not to assess public property. And of course the Council will defer to O’Farrell on intra-district matters like BID formation. So he could easily save all this money for actually useful, actually public purposes. But why would he? We’re not his constituents, after all. The zillionaires are.
Image of Mitch O’Freaking Farrell is ©2020 MichaelKohlhaas.Org and it might just have come from somewhere in this lil thriller over here.
- At §36622(k)(2), which tells us that [p]arcels within a property-based district that are owned or used by any city, public agency, the State of California, or the United States shall not be exempt from assessment unless the governmental entity can demonstrate by clear and convincing evidence that those publicly owned parcels in fact receive no special benefit.
- And probably more. I haven’t found a workable way to take annual assessment increases, which can be as large as 5%, into account.
- These figures leave out $12,420 paid each year by the City of Long Beach to the San Pedro BID, which I assume has something to do with the Port.
- This is obviously true even when there’s not a pandemic going on.
- I collected all of these on Archive.Org, although they’re also available from the City Clerk’s BID website. Note that a few LA BIDs are so-called merchant BIDs rather than property BIDs. Merchant BIDs aren’t required to prepare engineer’s reports, but also their assessments are paid by business owners rather than property owners, and the City isn’t subject to that kind of assessment.
- BIDs, the City of Los Angeles, and probably every other public agency involved, have essentially all stopped responding to CPRA requests during the pandemic. Not that they were responding particularly well before, but now they’re really not. So I don’t have any workable way to find current values without doing a lot more research than I’m willing to put into it, which is why I’m sticking to the guaranteed low figure.
- Includes LADWP, LAWA, LAPD, LAFD, RAP, and POLA, when applicable. The reports I’m getting the data from aren’t consistent about these divisions so it’s more accurate not to separate them.
- These figures are how much LAUSD is assessed by the BIDs. It’s not necessarily how much LAUSD pays. They’re famous for refusing to pay full assessments and sometimes they won’t pay anything at all. This is a largely unexplored, largely unexploited phenomenon in the local BID world.
- Los Angeles Community College District.
- I don’t know about the LACCD. I’m guessing it’s something like LAUSD?