Published on September 6th, 2012 | by RLn Staff1
The Problem of Fixing L.A.
The sidewalk repairs are a classic example of our dysfunction as a city
By James Preston Allen, Publisher
Every time I hear that the Los Angeles City Council is going to hire another consultant to study one of our multiplicity of problems, I just cringe thinking, “another over-priced report telling us what we already know.” So you may have heard that the suggestion coming out of Councilman Joe Buscaino’s subcommittee on Public Safety was to hire a consultant for what staff estimated was up to $10 million to do a survey of our cracked and crumbling sidewalks. Luckily some of the council members balked at this, but in the big picture of city budgets and city contracts $10 million isn’t a big number. It does however start to add up, and that seems to be the city’s biggest problem.
The problem of fixing things in Los Angeles is one of perspective. The centralized bureaucracy in Los Angeles wants to control everything from the top down with “big city” efficiency in an effort to prevent, or at least, stem corruption and waste. Our citizens on the other hand want services and solutions delivered on a local, I-want-to-see-the-face-of-government on a small city basis. In reality L.A. is not the classic example of “big cityness,” but rather a collection of small communities, some former municipalities, that over the last century were annexed into the one big metropolis.
So in the vacuum of city solutions, both big and small, I’d like to proffer one that seems quite simple to see if anyone at the council has the gumption to try it out.
Who knows the city better than the citizens of the neighborhoods who live there? Lets engage them, or perhaps empower them, to solve their own sidewalk problems. There are some 93 chartered neighborhood councils who could be enlisted for this task, if given the proper incentive. Let’s say that the City Council authorize a budget of $10,000 per neighborhood council to survey their district. Give them city engineering maps and a deadline of say three to six months to submit the number of feet and addresses of the sidewalks and curbs needing repair, with the caveat that they only get paid upon completion.
As the neighborhood councils cover most of the city, any areas that are not covered could then be surveyed for far less than $10 million, but by engaging the councils the city would do several things: give some real power to the citizens to help fix a chronic public safety problem that is a serious liability risk; give the neighborhood councils back some funding that was lost from the current budget; and save the city some 90 percent of what it would cost to hire a consultant who would take three years to learn the neighborhoods.
This decentralized approach will undoubtedly have its glitches that could probably be solved by allocating another five percent of that $10 million to oversight and review by department of Street Services and/or Bureau of Engineering, but still we would have motivated citizens on the ground working with city employees solving a common problem. I know this sounds way too optimistic to happen in Los Angeles, but stranger things have happened when we get our minds around something that is truly for the common good.
So let’s say that the City Council gets these 93 neighborhood council reports and they are fairly accurate, what does the city do next? It is estimated that the repairs alone on this “deferred maintenance” of sidewalks and curbs is going to cost $1.2 billion. Yikes! And even scarier is that some at City Hall think that the individual property owners where the repairs are made should pay for it– ouch!
Let’s get one thing sorted out first. Sidewalks are public right-of-ways just like streets, and the city should no more charge a property owner for repaving the street in front of their property than they should replacing the sidewalks or curbs. This is primarily the City’s responsibility and duty.
Now let’s talk seriously about how the city can afford to pay $1.2 billion in repairs, if that is even an accurate estimate seeing as how no one has done the survey or the math yet.
I would once again like to suggest a novel approach that solves more than one problem. Currently the various city pension funds that hold billions in investments that are not consistently seeing the return on that investment from Wall Street brokers. This means that the city has had to “back fill” its obligation out of the general fund by as much as $200 million a year. In a recent L.A. Times article the cost of pensions was pegged at 4.2 percent of the city’s budget with it ballooning to something like 15.6 percent by 2016. Of course this is based on the actuarial projections of current revenues and the rising projection of costs for retirements. What if the pension funds had a better rate of return?
Likewise, the city’s bond rating isn’t what it use to be. So if the city issued bonds to cover the cost of the sidewalks, we would have to a pay higher rates. The cure that I propose would be for the various pension funds to jointly invest in their own city. Loan the city the money to repair the sidewalks at a fixed rate for 20 years, at a rate higher than their average return but lower than the rate we’d pay on bonds. To guarantee those loans the city would put up real property as collateral– such as the convention center or perhaps the Greek Theater–depending on the assessed value needed. The city would win in several ways. One of those ways would be that we won’t have to pay broker or placement fees to sell a new issue of bonds and we wouldn’t have to pay the cost of placing it on the ballot. Another way is that it would guarantee a constant rate of return to its pension funds, thus lowering the percentage of its general fund obligation and lastly the city would get a better rate on this debt than it would get from the market.
The savings to the city just might be enough to pay for itself without having to raise taxes, fees or the price of parking tickets. And if this closed -loop investing were to work in one area, who knows how much the city could save with this self-funding mechanism if were it put to greater use by building other needed infrastructure or low income housing– just as long we don’t let the big developer types start thinking that they can fund their special projects by doing this! This is public money to be used to directly benefit the public and guarantee safe returns for our retirees, nothing more.
The bottom line of this plan is that the self-funding mechanism keeps the Wall Street banksters out of the public purse when we need to fund a project that is obviously a benefit to the common good for all of Los Angeles.