THE VIEW FROM HERE - The two major themes of the Los Angeles mayoral race between Rick Caruso and Karen Bass were (1) The homeless crisis and (2) city corruption. Both were mere symptoms, similar to how a fever and a rash are symptoms of measles. Sticking the thermometer into a glass of cold water and covering spots with make-up do not cure the disease.
Karen Bass has to contend with two crimogenic institutions: The city itself! It is not a few bad apples; rather, City Hall itself has become crimogenic. Likewise, the California judiciary does not have a few rogue judges taking bribes, but rather the entire judicial system has become crimogenic. While both impact Mayor Bass, this article focuses mostly on the crimogenic city.
Corruption vs Crimogenic
All institutions have corruption. There are always thieves, psychopaths, and easily tempted individuals who break the rules, but their existence does not mean that the institution itself is structured so that it has become a criminal enterprise, i.e. crimogenic.
Due to its Vote Trading System where each councilmember must vote Yes for each project any other councilmember places on the city council agenda, Los Angeles City Council has become a criminal enterprise, masquerading as a governmental body. It runs by classic vote trading, “I’ll vote Yes for your project and in return you will vote Yes for my project.” Penal Code, § 86 criminalized vote trading. By definition, any California city council which operates on the basis of a vote trading system is crimogenic. The fact that LA City is crimogenic is highlighted by the FBI investigations into former councilmembers Mitch Englander and Jose Huizar. November 10, 2018, CityWatch, The FBI Seeks…But Will Not Find, and January 17, 2019, CityWatch, Pay for Play, Vote Trading: Did Garcetti Want the Huizar’s Gone?
The FBI ignored other much easier cases which might have deterred Eric Garcetti from going hog wild into corruptionism. The FBI ignored the 2010 real estate fraud concerning the CRA Project at 1601 N Vine, “The Cesspool on Vine,” where Garcetti presented the city council with a hyped real property appraisal which was about $1.4 Million above market. Nor, did it care that Garcetti’s fund raiser Juri Ripinsky who had spend two years in Leavenworth for bank and real estate fraud got the El Paseo project at the old Sears site in Hollywood. Nor, did it question what happened to the $425 Million missing from The Hollywood-Highland Project in 2004. What actually upset the Feds was that Huizar and Englander were interfering with the Vote Trading System.
For Developers, the Vote Trading System Is Genius
All a developer need do is buy one councilmember to allow construction of some horrible project which violates as many laws as the developer wants in order to have an absolute guarantee that city council will unanimously approve the project. Englander and Huizar, however, were hitting up developers for more bribes at the PLUM stage (the City’s Planning, Land Use and Management Committee). The LA Times reported a growing threat to the simple “one bribe and done” system. First, there was the Sea Breeze Project. Janice Hahn got $203,000.00 - Sea Breeze was in her council district, Mitch Englander got $65,800.00, Jose Huizar got $30,4000.00, Buscaino got $94,700.00, Nury Martinez got $7,700.00, and, of course, Eric Garcetti’s charity got his cut, $60,000.00. October 20, 2016 LA Times article A $72-million Apartment Project. Top Politicians. Unlikely Donors, Who Wrote the Checks to Elected Officials Weighing Approval?, by David Zahniser and Emily Alpert Reyes
Also in 2016, developer Rick Caruso gave $125,000.00 to Garcetti’s non-profit and $200 Million to Measure M. “Caruso . . . donated to all but one of the city’s 17 elected officials.” . . . [he gave] more than $476,000 to the city’s elected officials and their initiatives over the past five years.” December 28, 2016, LA Times, Political Donations Flow as Rick Caruso Seeks Approval for a 20-story Tower near the Beverly Center, by David Zahniser.
Since the Vote Trading System operated only when the city council voted, this pattern of paying off lots of city officials in order to get PLUM approval was jeopardizing the beauty of the Vote Trading System where only one councilmember had to be bought. Had the FBI’s investigation waited until Huizar’s project received its unanimous city council approval, then the Feds could not ignore the Vote Trading System. The councilmembers had collectively racked up more than one million years in prison terms for violations of Penal Code, § 86. By stopping the investigation prior to the city council’s voting, The Fed’s message was loud and clear – Do not mess with the vote trading system.
How Will Karen Bass Deal with the Criminal Vote Trading System?
The new City Attorney, Hydee Feldstein-Soto, cannot bring charges against the city since she is the attorney for the city. An attorney may not sue her own client, nor may the city attorney divulge anything which she learns about city corruption as she owes the city a duty of confidentiality. She can advise the city council to stop, but she cannot squeal on her clients. Thus, the City Attorney cannot help Karen.
Karen Bass’s Economic Dilemma
If Karen Bass had a magic wand to make all the future corrupt projects vanish so that LA would stop constructing into a housing glut, economic disaster would likely follow. Los Angeles is addicted to construction dollars even though excessive density construction is destroying the city. The need for Hollywood in particular and Los Angeles in general to de-densify and down-zone was clear in 2012 when Garcetti brought his 2012 Update to the Hollywood Community Plan. In January 2014, Judge Allan Goodman threw out the Hollywood Community Plan as it was “intentionally based on fatally flawed data,” but Hollywood’s densification continued. After Garcetti was elected mayor, Manhattanization of LA forged ahead. As Save Hollywood and HELP had proven in the Hollywood Com Plan case, densification results in people moving away from dense areas. The more Hollywood densified, the more poor people the construction made homeless and the more middle class people moved away. Hollywood population dropped from about 214,000 ppl in 1990 to 195,700 ppl in 2019. Manhattanization did the same to the city population.
Developers made money by destroying Rent Control Units (RSO’s) as they were the cheapest to buy and were inhabited by tenants who could not fight back against corrupt judges who evicted them. The developers treated tenants like human trash which would self-disintegrate. Instead, the homeless bought tents and set up encampments near where they used to live, and then they moved into Valley. As the corrupt Manhattanization made developers vastly more wealthy, Hollywood and the City saw Family Millennials flee. The poor crowded beneath freeway under passes, while the middle class bought large detached homes in Austin, Nashville, and Denver. Employers joined the middle class exodus. The courts’ solution was to disbar the attorney, Your Truly, on the joint basis that he presented the unwanted facts that density led to decline and was a troublemaker Jew “who would refuse Jesus Christ.”
The city’s rate of population increase was decreasing which meant that soon the city would lose population: 1990's population was 1.6% more than 1980, but the 2000 increase was only 0.6%, then the 2010 increase was only 0.2%, the 2020 was 0.3%, but by 2021 population dropped was -1.0% and has decreased further by 2023. The city population had been barely inching upward because Baby Boomers were dying a slow rate and births were greater than the middle class who were leaving. Baby Boomers who do not die do need not new homes and babies do not buy or rent homes. Each person who leaves the city vacates a living space. Thus, the city was building into a housing glut.
The Middle Class Will Not Inhabit What Developers are Building
Because LA has well over 93,000 vacant units, there is no need to construct a single unit for the homeless. More construction creates more density which raises prices which forces more Family Millennials out of state. Thus, the mere act of constructing affordable housing makes those areas more unaffordable for everyone else. This is fine if you’re a money launderer who likes to buy high, but not so fine, if you want a decent place for your family.
Until the Vote Trading System is gone, developers can continue to construct as much density as they desire until the Bankman-Fried FTX Effect kicks in. Like a pyramid scheme, FTX and LA’s Housing Glut rest on the expectation that someone dumber than the last guy will come along and buy what you want to sell. Like FTX, a large section of Los Angeles’ recent construction serves no useful purpose. People do not want to live in them and businesses do not want to rent high cost offices. Their value rests primarily on naive real estate speculators and money launderers. When these two groups realize that LA real estate in like a tulip and like the 1720 South Seas Bubble, they’ll realize that Eric Garcetti is actually Bankman-Fried with a decent haircut.
Karen Bass’s Nightmare
If she could stop the real estate construction, the economy would collapse. If she does not stop the real estate construction, the economy will collapse when investors have their FTX moment.
(Richard Lee Abrams has been an attorney, a Realtor and community relations consultant as well as a CityWatch contributor. You may email him at [email protected]. The opinions expressed by Mr. Abrams are solely his and not necessarily those of CityWatch.)