UNDER THE RADAR--At 12:56 on Monday afternoon, June 19, 2017, we were notified by email that the politically appointed Board of Water and Power Commissioners will hold a Special Meeting on Tuesday, June 20, 2017 at 11:30 in the morning to approve a resolution authorizing Approval of Amendments to the Memoranda of Understanding for ten bargaining units represented by IBEW Union Bo$$ d’Arcy for the term October 1, 2017 through September 30, 2022.
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LA WATCHDOG--On Wednesday, the City Council approved, behind closed doors, a Settlement Agreement involving a class action lawsuit against the City of Los Angeles and the Department of Water and Power that alleged that the City had illegally collected over $1.8 billion in Transfer Fees from DWP and its Ratepayers subsequent to the approval of Proposition 26 (The Supermajority Vote to Pass New Fees and Taxes) in November of 2010.
The plaintiffs also requested that the Transfer Fee be eliminated since it was not approved by the voters.
But once again, we are getting the shaft.
Under the terms of the settlement, DWP will place $52 million into a Settlement Fund. But at the end of the day, only $40 million will be available to the Ratepayers as the ambulance chasing lawyers who “represented the best interests” of the Ratepayers will be paid at least $10 million from the Settlement Fund.
The Net Settlement Fund of $40 million represents a meager 2.2% of the $1.8 billion that Ratepayers forked over to our profligate City to fund ever increasing salaries and pension contributions.
For the average household that uses 500 kilowatt hours a month, the total refund is whopping $10. This compares to $460 that the average Ratepayer forked over to DWP to finance the Transfer Fee over the past seven years.
LA WATCHDOG--On Thursday, the Los Angeles City Council approved a “fiscally responsible” budget for the upcoming fiscal year beginning July 1, 2017 despite what they claimed were “challenging” economic times. But despite all the self-congratulatory speeches, the City’s budget is a train wreck as pension denier Paul Krekorian, the Chair of the Budget and Finance Committee, City Council President Herb Wesson, and Mayor Eric Garcetti continue to kick the budget can down our lunar cratered streets.
LA WATCHDOG--Why has Councilmember Paul Krekorian, the Chair of the Budget and Finance Committee of the Los Angeles City Council, refused to address the massive unfunded pension liability of the City’s two pensions funds and the ever increasing annual required pension contributions that will devour the City’s budget and adversely impact the quality of life of future Angelenos?
LA WATCHDOG--Our cash strapped City is “exploring the implementation” of a Child Savings Account program for each public school kindergarten student who lives in the City of Los Angeles. This program would cost $2.7 million a year as $50 will allocated to each of the 44,000 (charter and non-charter) kindergarten students in the Los Angeles Unified School District. This amount includes matching funds for the 25% of the families who make an additional contributions, but does not include the 11,000 LAUSD students who do not live in the City.
LA WATCHDOG--The second most dangerous place in the City of Los Angeles is when you stand between cash and the City’s General Fund, even if the source of this revenue adversely impacts our neighborhoods and quality of life.
This is the case with the City’s 14% Transient Occupancy Tax (the “hotel tax”) that is collected by Airbnb and other short term rental web sites (collectively, “Airbnb”) from their hosts who illegally rent their rooms, apartments, and houses for less than 30 days.
We are not talking chump change for this recently discovered gold mine.
For the fiscal year ending June 30, 2017, the City budgeted revenue of $5.8 million from Airbnb, up from zero in the previous year. But lo and behold, the revised estimate is a whopping $27.5 million, a $21.7 million bump that aroused the financial wizards that occupy City Hall. And for the upcoming fiscal year beginning July 1, 2017, the City is projecting a haul of $33.7 million, a 23% increase from the revised estimate.
This implies that Airbnb hosts had revenues of $240 million, which, in turn, produced over $30 million of revenue for Airbnb.
While Airbnb, its hosts, and the City each have a vested interest in maximizing revenue, this financial goal may run counter to the wishes of many Angelenos who believe that the in-and-out flow of transients disturbs their neighborhoods and compromises their safety, quality of life, and quiet enjoyment of their neighborhoods and apartment complexes.
The hotel industry is also opposed to Airbnb because it represents a competitive threat, diverting revenue from their hotels by offering a low-cost alternative for tourists and the business community.
The unions that represent hotel employees are also bent out of shape as they believe that the diversion of revenue from hotels will result in fewer union jobs and lower dues revenue to cover their overhead.
The affordable housing and tenants’ rights advocates are also opposed to Airbnb because selected landlords are converting apartments to short-term rentals, depleting the supply and causing already high rents to increase. This may force many displaced and already rent burdened tenants into even more over-crowded apartments or onto the harsh streets of LA.
The budgeted revenue assumes that there will be no change in the existing policy. But the City Administrative Officer estimated that if the Airbnb hosts were limited to one property and if the annual number of nights booked is capped at 180, then revenue would drop from 46%, from $33.7 million to $18.2 million, a swing of $15.5 million.
Several organizations such as Keep Neighborhoods First are proposing a 60-day cap that they argue will allow for true home sharing and preserve affordable housing by limiting the incentive for landlords to enter the short term rental market. But this cap may further reduce revenues for the City.
The Planning and Land Use Management Committee chaired by Jose Huizar is expected to consider the Home Sharing Ordinance that will pit the financial interests of the City and Airbnb and its hosts against quality of life interests of homeowners and apartment renters, the hotel industry and their unions, and rent burdened tenants and their advocates.
More than likely, the money grubbing Mayor and City Council will put on a show and express their concerns, but the result will be that the Garcetti and the City Council will sell us out and go with the dough.
As a side note, overall revenues from the hotel tax are projected to increase by almost 7% to $282 million. This represents almost 5% of General Fund revenue. But this revenue estimate may be optimistic as international visitors, who spend more than twice as much as domestic tourists, may be turned off by the Trump Effect and the strong dollar.
By the way, the most dangerous place in Los Angeles is when you are between the campaign war chests of our Elected Elite and cash campaign contributions from real estate developers, leaders of the City’s unions, and other self-serving ring kissers such as Airbnb.
(Jack Humphreville writes LA Watchdog for CityWatch. He is the President of the DWP Advocacy Committee and is the Budget and DWP representative for the Greater Wilshire Neighborhood Council. He is a Neighborhood Council Budget Advocate. He can be reached at: firstname.lastname@example.org.)