I just wrote this morning on the surprising fact that it seems the LAUSD will no longer automatically approve BID establishment/renewal petitions. This in itself is a monumental development, which may make it somewhat more difficult for BID establishment to happen. The emails on which that earlier post were based, between staffers at the Byzantine Latino Quarter BID and various parties including their renewal consultant Don Duckworth, are available here on Archive.Org, are an extremely rich set, and there is much of interest in there.
Now, recall that in order for the City to move forward with the BID renewal process it’s required by the Property and Business Improvement District Act of 1994 for the proponents to collect petitions in favor of renewal signed by property owners holding more than 50% of the proposed assessed value, which is known in the jargon as 50%+.1 Hitherto, in accordance with an ordinance adopted by the City Council in 1996, the City of Los Angeles would always sign petitions for establishment.
However, at least according to what is clearly the most consequential item in this release, and one of the most consequential records in my entire collection, which is this May 1, 2018 email from BID consultant Don Duckworth to BLQ BID staffers Moises Gomez and Rebecca Drapper, that policy may no longer apply. Therein Duckworth is informing his clients of the status of their ongoing petition drive. Up until May 1, Don Duckworth and the staffers working with him had taken the City’s support for granted, as would be expected. However, that morning, says Duckworth, everything changed:
The City Clerk’s Office informed me this AM that the City Petitions count [sic] not be counted until the overall total of all other Petitions was 50% or more. (That’s a new practice.) This does affect our methodology for completion of the Petition Drive as shown below. We still have some work to do!
If this is accurate, and I don’t know why it wouldn’t be, it raises two monumental questions. First of all, how is it legal for the Clerk to adopt a policy like this without City Council approval given that it seems to contradict the 1996 policy, which was approved by the City Council? I am in the process of investigating this and I’ll get back to you on it if I learn anything.
Second, what will happen to BIDs with extraordinarily high proportions of City property, included by BID proponents to take advantage of the City’s automatic approval policy? The BLQ BID only has around 2.5% City property in it, so it wasn’t hard for the proponents to get to 50%+ without the City’s petitions.
However, some BIDs, and the Venice Beach BID and the San Pedro Historic Waterfront BID are two of the most egregious examples, don’t seem to have any hope at all of hitting 50% approval without the City’s petitions. What will happen to BIDs like this when they come up for renewal? Turn the page for more detailed analysis and some speculation!
First, let’s talk about Venice. According to the Clerk’s report from June 2016 the City property makes up 25.05% of the assessed value.2 Furthermore, the establishment process was started on the receipt of petitions representing 52.31% of the value to be assessed. If the City petitions are deducted, then, only 27.26% of the non-City property owners were in favor of BID formation.3
And the Venice Beach BID is so famously incompetent, hated by all sane people even before it began and, by now having even driven the famously tolerant4 City Clerk’s office to vocal disapproval and even threats, not to mention the forced refund of 2017 assessments due to the fact that the BID actually did nothing whatsoever for one full year, that it seems incredibly unlikely that they could ever overcome the deficit which would be created by the Clerk’s refusal to sign the City’s petitions in advance and thereby get to 50%+ without the City petitions. It seems completely impossible.
They had 27.26% in 2016, but how in the world is that going to go up, especially up by the 22.75 points needed? So many more people hate them at this point that it’s not even clear that they’ll pass a new petition phase even if the City does vote its damn petitions. The VBBID was established for five years starting on January 1, 2017, so it’ll expire on December 31, 2021. As incredible as it seems then, the BID will have to start its renewal process early in 2020, which is less than two years from now. Won’t it be interesting to see how that unfolds?
The case of the San Pedro BID is even more extreme, even though that BID gets a lot less attention.5 Check out the Clerk’s report for the BID’s ten year renewal last year. In this case the proponents collected petitions representing a whopping 63.28% of the proposed assessed value. But this relatively sky-high figure is nowhere near as impressive as it seems when you consider that the City owns parcels worth a much-more-than-whopping 37.24% of the proposed assessed value.
This means that only 26.04% of the value represented by petitions was owned by persons other than the City of Los Angeles. Interestingly, this particular BID renewal pushed up against a little known limitation mandated by the PBID Law, which states at §36621(a) that:
The amount of assessment attributable to property or a business owned by the same property or business owner that is in excess of 40 percent of the amount of all assessments proposed to be levied, shall not be included in determining whether the petition is signed by property or business owners who will pay more than 50 percent of the total amount of assessments proposed to be levied.
That is, if one owner owns property worth more than 40% of the proposed assessed value that owner’s property can’t be counted in the petition phase. This section is well-intentioned, I suppose. The point seems to be to prevent one owner from having too much say. But it’s not well-designed. In fact, it invites gaming, as the City has done here.
It’s true that the City can’t change the amount of property it owns easily, but it can certainly change the boundaries of the proposed BID easily. City staff are involved at all stages of the BID renewal process, and can surely keep the proportion of City owned property at 40% or below but very close to 40% by tweaking boundaries.
The point is that even though the law attempts to limit outsize influence by one property owner, when that property owner is the City of Los Angeles, which owns very many parcels and has intimate control over every stage of the BID formation process, it’s impossible to limit influence by determing a fixed percentage beyond which petitions don’t count. Some other type of measure will be necessary.
Now, the San Pedro BID renewed for 10 years starting on January 1, 2018, so it’s useless to speculate about what effect these kind of shenanigans or this kind of rule change might have on its chance for renewal. But looking at its last renewal in 2012 might provide more evidence, however tenuous. The 2012 Clerk’s report noted that the City owned 27.97%6
Furthermore, the petitions added up to 53.04% of the assessed value. Thus non-City owners accounted for only 25.07% of the petitions. This is worse than it was in 2017 but still within any sensible margin of error. The point is that if the City sticks to the policy that they announced to Don Duckworth on May 1 of this year, this BID will never in a zillion years actually manage to renew. It’ll be interesting to see what happens, especially if it’s possible to get more information on what Don Duckworth was talking about!
Image of Dandy Don Duckworth doing the Duckie Dance is ©2018 MichaelKohlhaas.Org and is a teensy bit similar to this beautiful image of Auntie Maxine.
- I mean, probably it’s just me, but I love this kind of jargon, even if it’s in the service of something as fundamentally sinister as BIDs. Probably Satan has complex specialized terminology related to the laying to waste of human souls, and probably the terminology is interesting even if the activity is abhorrent. For a broader, much more beautiful take on the matter, see Gerard Manley Hopkins’s fabulous poem Pied Beauty, especially the bit about all trades, their gear and tackle and trim.
- There is a small anomaly in the Venice Beach BID situation. Some of the really beachy property in the BID is actually owned by the State of California, but it’s indefinitely leased to the City and the State has ceded its voting rights, so this counts as City property for a BID analysis even if in some technical sense it’s owned by the State. It’s not especially relevant either way as the actual City owned property is 23.04% of the BID’s value and the actual State owned property is 2.01%.
- This figure includes property owned by other government agencies, like LAUSD and Metro, although for the sake of clarity I’m ignoring that. The amounts involved are very small compared to the City’s property, so this doesn’t affect the analysis.
- Tolerant of the evil shenanigans of BIDs, anyway. Not so tolerant of pressure from citizens who care about this City and can’t stand to see what BIDs are doing to it with the approval and support of the Clerk. But I spose one can’t have everything.
- Probably because as horrible as the San Pedro BID is, and it’s pretty horrible, it’s not even close to as horrible as the Venice Beach BID. Or maybe Venice is a much more holy place in the place-based pantheon of our great City than San Pedro, which nevertheless is quite holy, that we as a people can’t help but focus much more of our spiritual anguish on Venice. Or maybe I’m just spewing crap again. Or maybe both.
- This figure is obtained from 6.34% owned directly by the City, 0.21% owned by the defunct CRA, and 21.42% owned by the City but controlled by the Harbor. For our purposes these distinctions are not important.