So a couple weeks ago I wrote about an episode in November 2016 when Blair Besten, executive directrix of the good old Historic Core BID, at the behest of her Board of Directors, lobbied the City of Los Angeles about incentives for Skid Row development which included a seemingly endless list of wet fever dreams like no taxes ever, no height limits, no required affordable housing, and so on. Well, then someone posted my post to the Facebook asking, among other things, if Blair Besten’s lobbying was even legal. The post unleashed a deluge of stranger-danger visits to our cozy and haimish little blog and the usual slew of idiotic comments by the usual slew of unselfaware idiot commentators over on the Facebook itself.
Well, Mom had a favorite saying about wrestling with a pig, and that goes doubletime for arguing with the Facebook commentariat. So we all just ignored the whole mishegoss until, as will sometimes happen, it occurred to me that one of the most ignorant offensive mansplainy clueless wrong-headed imaginary-internet-lawyerly comments of all would provide a perfect foil for a post that I had been meaning to write for a while now anyway, and that’s how we ended up right here and now, friends.
The dimwitted commenter asked1 the OP: “What specific actions of hers do you think are of questionable legality?” This is one of them Internet comments that’s supposed to make the reader say something like “Hmmm…. now that I read that incisive question I can see that I really am a foolish dupe after all and the only reason I even had an opinion is because no very smart fellow ever challenged me… OK, I retract every idea I have ever had!!
However, as it happens, there are a number of ways in which Blair Besten’s specific action of lobbying the City on behalf of her employers with respect to development conditions on Skid Row violated various laws. For better or for worse, the discussion is unavoidably technical, and you gotta turn the page if you wanna read it!
First we need a little background on what BIDs are exactly. They are geographic areas within which every commercial property parcel has to pay a mandatory assessment in addition to the usual property taxes etc. The money is spent by a private nonprofit corporation known as a property owners’ association.2
Because the money is collected involuntarily using the coercive power of the municipality, there must be strict controls on how it’s spent. It would be manifestly unfair for the City to take money involuntarily from property owners and hand it over to a private corporation to spend however they want. Thus, when a BID is established, State law3 requires that a so-called Management District Plan (MDP) be created as well.
This MDP must contain “The improvements, maintenance, and activities proposed for each year of operation of the district and the maximum cost thereof.” At the time the City Council votes to create the BID, they’re allowed to edit this plan as they see fit.4 This also is morally and probably legally required by the fact that the money is being collected involuntarily. The elected representatives of the people must ultimately control how coercively collected money is spent.
After the MDP is finalized the list of activities and improvements therein completely determines what the BID is allowed to spend its money on. This is stated super-clearly in the governing law at §36625(a)(6), which says in part that:
The revenue from the levy of assessments within a district shall not be used to provide improvements, maintenance, or activities outside the district or for any purpose other than the purposes specified in the resolution of intention, as modified by the city council at the hearing concerning establishment of the district.
There are two salient points here. First, assessment money must only be spent on activities listed in the MDP.5 Second, assessment money must not be spent on activities outside the district. This is an instance of an extremely useful method that legislators have to control executives. It’s called the Power of the Purse and is used at all levels of American government. In this case, the City Council fulfills its duty to the people of Los Angeles to retain control over the activities of publicly funded BIDs6 by restricting the activities on which they can spend money to things inside the district that were listed in the MDP. That is, they exercise the power of the purse over BIDs.
Now, let’s get back to Blair Besten and the Historic Core BID. Recall that in November 2016 she communicated the thoughts of the HCBID Board of directors to the City of LA about development in Skid Row. First of all, her convening a discussion and her writing a letter to the City are actually spending BID money. She is paid from BID money and all her on-the-job activities are BID activities.
Thus her on-the-job activities must be things specified in the MDP and they must be within the Historic Core BID. The second one is easily seen to be a violation. Most of Skid Row is not within the Historic Core BID, so by lobbying the City about conditions of development in Skid Row itself she was violating the PBID law at §36625(a)(6).
But she also broke the law requiring assessment money only to be spent on pre-specified activities. The Council File for the creation of the Historic Core BID is CF 13-0655. You can find the MDP in there. Also, here is a direct link. Finally, here are the salient four pages from the MDP describing activities. There’s nothing at all in there about lobbying the City with respect to real estate development.
In fact, there’s nothing at all in there about lobbying of any kind. Note that many other BIDs actually do put lobbying in their MDPs, so it’s not like no one ever thought of this before. In fact the City of LA actively encourages BIDs to lobby. But they must put it in their MDP first. Thus in lobbying the City about Skid Row, Blair Besten was also violating the PBID law at §36625(a)(6) for a whole different reason.
And this isn’t a trivial transgression on her part. For context, suppose the Board of the HCBID decided that they were all going to join PETA and directed Blair Besten to spend her time lobbying the City about the fate of Billy the Elephant. Clearly this would be a betrayal of the property owners whose money is being spent. It’s precisely the same thing with her spending her time, paid for with other people’s money, on the development of Skid Row. Preventing this kind of rogue behavior by POAs is precisely the reason why the legislature built so many spending constraints into the PBID law.
Now, BIDs are typically established for between five and ten years.7 It’s plausible that the needs and aspirations of the property owners in a BID would change over that kind of time. Thus the law makes it possible for BIDs to change the activities on which they’re going to spend their assessments. The procedure is controlled by the PBID Law at §36650, which requires a BID to submit an Annual Planning Report (APR) to the City Council each year.
The APR contains a list of stuff the BID will spend its money on in the coming year. It’s subject to the same kind of editing process as MDPs are, so, as with the MDP, its contents are entirely under City control. And this isn’t just an imaginary power. For instance, there is a recent case where the City rewrote the Media District BID’s APR, as the law explicitly gives them the right to do.
So at least arguably, if the HCBID’s 2016 APR had something about lobbying on behalf of Skid Row developers, or even lobbying in general, it wouldn’t have been against the law for Blair Besten to spend assessment money on her lobbying activities. But here is a copy of the HCBID’s 2016 APR. Again, there’s nothing in there at all about lobbying, let alone lobbying for conditions of the development of Skid Row.
In summary: by spending assessment money in the form of her salary to lobby the City of Los Angeles on conditions for the development of property in Skid Row, Blair Besten violated the PBID law at §36625(a)(6) both because Skid Row is mostly not in her BID and because lobbying was not one of the activities approved by the City at the creation of her BID.
And violating this law has potentially serious consequences. In fact, it could lead to the dissolution of the Historic Core BID. The PBID Law at §36670(a)(1) states:
If the city council finds there has been misappropriation of funds, malfeasance, or a violation of law in connection with the management of the district, it shall notice a hearing on disestablishment.
Of course, the kicker here is that it’s not enough that someone violates the law. Additionally the City Council has to find that a law has been violated. They’re never going to do this because I write an article on my obscure semi-lunatic-fringe blog asserting that Blair Besten broke the law. I believe it would take an actual court finding that a law was broken before the City Council would feel obligated to invoke this section. More importantly, it would probably take an actual court finding that a law was broken before a court would force the City to invoke this section.
More interesting still is California Government Code §1222, which states in full:
Every wilful omission to perform any duty enjoined by law upon any public officer, or person holding any public trust or employment, where no special provision is made for the punishment of such delinquency, is punishable as a misdemeanor.
Of course, Blair Besten is not a public officer, and she does not hold public employment.8 However, she does certainly hold a public trust. The assessments are money that’s public enough to subject the BID to the public records act and the Brown act, which makes them pretty surely public enough to constitute a trust.
Which means that by violating the laws regulating the spending of assessments, Blair Besten is probably guilty of a misdemeanor. Just like all the freaking homeless people she bitches and moans about in the papers and just like a number of HCBID Board members. And that right there is why our friend the obnoxious know-it-all not-a-lawyer-but-plays-one-on-the-internet,9 Facebook pal was wrong indeed. By lobbying as she did, Blair Besten was almost certainly breaking a number of laws. Now, I don’t know if my analysis is correct, but it did pass the MK.Org legal theory test, which is that I explained it to more than zero lawyers at a cocktail party and fewer than all of them laughed!
In fact, when I first started writing this post I planned to discuss another essential law that Blair Besten was likely breaking. She is almost surely guilty of violating the requirement in the Municipal Lobbying Ordinance to register if one is paid to lobby (and some other conditions). But at this point on what was meant to be a lazy Sunday afternoon, I’m worn out with legalistic detail.
And if I’m worn out, you, dear reader, must be worn out as well. I’ll revisit the matter at some point in the future.10 Meanwhile, if you’re not worn out and you’d like to get an idea of what’s at stake, you can read all about what it takes to prove someone guilty of failing to register as a lobbyist. And for now, I am signing off!
Image of Blair Besten and some flatfeets began its journey as this little slab of slooze on her Twitter feed and ended up in this little corner of the Internets proudly bearing the label: ©2017 MichaelKohlhaas.Org. Deal with it, BIDdies!
- Sorry, friends, no links to the Facebook. Find it yourself if you really must know.
- A POA. Note that everyone conflates the POA with the BID, and it’s usually easier to do this. For instance, the Fashion District BID is a geographical area the assessments collected from which are managed by the Downtown Los Angeles Property Owners Association. But we and everyone else in the world just calls it the Fashion District BID. We conflate these two terms throughout this post when it won’t cause confusion. In real life the main circumstance in which it’s absolutely required to distinguish is when one is filing a writ petition against a BID to enforce the public records act. You can’t sue a geographical area. You have to sue a corporation. Most other times the distinction isn’t especially important.
- The Property and Business Improvement District Law at §36622.
- See the PBID Law at §36624.
- The statute says that the money can’t be spent for any purpose other than those specified in the resolution of intention. The resolution of intention is a law passed by the City Council when the BID is established that incorporates the MDP. I was hoping to gloss over this technicality, but I found myself unable to let it go.
- I’m glossing over another technicality here. BIDs and the City all assert that BIDs are privately funded because they’re paid for from assessments in the district. However, once the money is collected involuntarily, it’s no longer private money. In fact, it’s tax money. This is one of the reasons that BIDs are subject to CPRA and the Brown Act.
- Five is the maximum life-span of a new BID. BIDs can renew their existence for up to ten years at a time.
- In fact, the PBID Law at §36612 states this explicitly: “An owners’ association is a private entity and may not be considered a public entity for any purpose, nor may its board members or staff be considered to be public officials for any purpose.”
- Like me, I admit it!
- Like when I have gathered enough evidence to report her to the City Ethics Commission. The day is coming, friends.