How Crony Capitalism Destroyed Los Angeles

MONUMENTS TO CORRUPTION - When we look at the downtown skyline, what do we see?  Theft of billions of tax dollars!

Almost everyone thinks that all those skyscrapers with the names of world famous banks and other financial institutions and international law firms are paying their fair share of property taxes. Wrong!

Most of those giants reaching to the sky were CRA projects.  CRA … the California Redevelopment Agencies, which the Governor, and then the Supreme Court recently killed.  

The financial cycle looks like pure money laundering.  The incremental property taxes paid by these developers were siphoned off and sent to the CRA and then the CRA used that money to finance other projects for these developers and often to simply give them money.  Strange to relate, the politicos on the city council are the ones who always had the final say on how much loot a developer would get.  Maybe now, the reader can intuit for him/herself why LA City Council votes together over 99.3% of the time.

We’ve all heard tell of someone, at some place, at some time in history, who thought that when corrupt politicians dole out tax dollars to greedy crony capitalists that they only support projects beneficial to the public.  We have yet to find such naiveté, except for members of the City Planning Commission.

Thus, no money goes to the police; yet Bunker Hill uses the police.  No money goes to the fire department; yet Bunker Hill uses use firefighters.  No money goes to our roads; yet Bunker Hill uses our streets.

By the time the CRA’s tax theft expires in 2022, Bunker Hill will  have evaded between $700 Million and $1 Billion in property taxes.

The exact amount of unpaid taxes is unknown.  If Bunker Hill were not covered by the CRA, then at each sale, the property would be re-assessed under Prop 13 and the amount of property taxes would have increased.  That is how Prop 13 works for everyone else.

Let’s look at another Monument to Corruption. The CRA Hollywood-Highland Complex.  It cost $625 Million to build.  Look at it – you tell me, how did they spend $625 Million to build that albatross?

Soon afterwards, it was sold for only $201 Million to one of Councilman Garcetti’s best buds, CIM Group.  

That is 32% discount off the construction cost.  Next mayor wannabe Garcetti and the other council members gave CIM Group an extra $30 Million to rehab the new Kodak Theater.  That means this one project lost $454 Million.  That is close to $1/2 Billion loss – and how many incremental property tax dollars does CIM Group pay into the general fund? None.

Oh where, oh where does the money go?

Ask billionaire Eli Broad (standing next to the vacant land for his parking garage above). The city has given sly Eli  $52 Million to have a parking garage for his art museum.  

What king’s ransom does Eli pay for the land that he rents from the city for his museum?  One dollar per year.   $1.00 per year.  

So he pays $1 rent and gets an extra $52 Million gift from the City. While the kids in Hollywood get no park and while Hollywood’s fire station is downsized by 75% endangering the homes and lives of thousands of Hollywoodians, Eli pays $1 and gets $52 Million.  Garcetti and LaBonge explained that parks and fire protection was too expensive.  We hear that Eli won the Schmuckus Tuckus Award 2011.

So when you look at the downtown skyline, visit Hollywood-Highland Kodak Theater, and look at all the tall buildings remember – they pay ZERO incremental property taxes, while receiving huge gifts of loot from the City.

Next, peel back the first layer of corruption and see the Goldman Sachs’ and other Wall Street financiers whose loans are guaranteed by your tax dollars.  That means YOU are on the hook to bail out Wall Street – once again.  This is no free enterprise; this is the essence of Crony Capitalism

Not only has the CRA used these mega projects to loot $3.5 Billion tax dollars on behalf of millionaires and billionaires, but it has also incurred $3 Billion in additional debt.  It looks as if the interest on that debt will amount to about $4.5 billion to be paid by the tax payer while the benefit of all that borrowing went to the developers.  That is a direct financial burden of about $11 Billion on the tax payer.

And lastly, go look for the parks we should have for our children, look for the fire stations that should have been built, look for the 21st Century libraries we should have, look for decent roads, — that’s how they’ve gotten away with this massive corruption for decades.  

We cannot see all the good things which do not exist!  All we see are the Monuments to Corruption.

We’ve been deceived by sleazy politicians into believing that all these mega-density projects are helping to support LA.  The reality -- they were sucking us dry and have left the city insolvent.

Downtown LA and Hollywood are Monuments to Corruption.  The first step to rid ourselves of these villains was the abolition of the CRA’s and the next step is to remove from office all the political parasites who have been feasting on us.

(Richard Lee Abrams is an attorney in Los Angeles. He can be reached at: Rickleeabrams@Gmail.com ) –cw

Tags: CRA, Community Redevelopment Agency, LA City Council, City Planning Commission






CityWatch
Vol 10 Issue 9
Pub: Jan 31, 2012