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Monday, December 22, 2014

Open Discussion: Would a “City of East Los Angeles” make economic sense?

By C. J. Salgado

Apparently, it’s hard to be a city these days. In the last year alone we’re been bombarded with the bad news on cities, with the state and county seeking to dissolve the Cty of Vernon in response to concerns of abuse of power, embezzlement, and a “controlled electorate.” Some Commerce city officials face accusations of wrongdoing and political corruption. Montebello officials accused of voter fraud, off-the-book bank accounts, and of pushing the city to near bankruptcy; And, of course, we remember the city of Bell that fell.

It’s no wonder that many residents of East L.A. are wary to support the current effort to incorporate this community. Despite the legitimate concerns that many residents have over mistrust of public officials in light of the many local failures, the misdeeds of public office holders is actually a red herring that distracts from the true issue at hand when considering the matter of incorporation– streetwise economics. In the end, cash flow will determine if East L.A. has what it takes to join the ranks of official “cities.”

Interestingly, the East Los Angeles Residents Association (ELARA), the main proponent of incorporating East L.A. (www. cityhoodforeastla.org), argues that an October 2007 preliminary financial study, or Initial Fiscal Analysis (IFA), which they

paid for, demonstrated that a prospective “City of East Los Angeles” would be financially viable without a tax increase and without a reduction of services. Sadly, the times are dramatically changed since 2007 and the current economic realities are far removed from the assumptions and projections of that 2007 IFA, now largely rendered irrelevant by the Great Recession that followed its release. In fact, local officials with the League of California Cities agree that the prognosis for cities continues to worsen. Nowadays, government jurisdictions at all levels are forced to swallow the bitter pills of imposing tax increases and spending cuts in addition to dealing with a wave of “reform” measures. Any proposed incorporation of East L.A. would not be immune to these harsh realities.

Clearly, East L.A. is under a heavy economic depression. Estimates of unemployment are at 18% or higher, especially given the relatively younger population of this community. In testimonial are the many vacant businesses and residential properties that sit idle in the market for a year or more, most in need of rehabilitation or renovation. New construction is in the doldrums. Perhaps, the economic climate in East L.A. is most poignantly exemplified by the canceling last year of the popular Annual East Los Angeles Christmas Parade because of lack of funds, only the second time to be cancelled in the last thirty-six years. Tony DeMarco, Vice President of the Whittier Boulevard Merchant’s Association, the organizer of the parade, stated in the L.A. Times, “the bottom line is, we don’t have the funds… that’s kind of the atmosphere in East L.A. No one has any money.”

Yet, in principle, incorporating East L.A. would be best for the long-term future of the community. After all, a chronic lack of representation for this community has left many residents clamoring for better services and a dedicated leadership to tackle a myriad of problems from environmental toxins to little park space to no Lamaze classes for expectant mothers. Becoming its own city should, hopefully, be a step above being the current stepchild of the county as an unincorporated area.

However, this would only be the case if it were done for the right reason and with the right assumption.  The right reason is to improve our community and transform it into an open, safe, vibrant, and sustainable modern, learning community that supports a balanced, growing, and formal local economy. The right assumption is that to do that, local residents and businesses would have to bear a fair share of the burden of paying for these developments, come into the game as legitimate economic players, and be ready to abide by the “rules of planning and order.” A prospective city government for East L.A. should primarily exist to facilitate those goals. There is a cost to becoming a city, but then something worth having is worth paying for.

Some say becoming a city should be done to preserve our old ways; I say it should be done primarily to build our future. It’s not so much about what we are but about what we want to become. Right now, in many ways, we are the “Wild Wild East Los” with little effective economic infrastructure or mechanisms to move us forward and up.

So what will the economy of East L.A. ultimately have to say about incorporating this community? Well, ELARA has pushed through that a Comprehensive Fiscal Analysis (CFA) be done to answer that question, a formal financial feasibility study, currently being done by a consulting firm, Economic & Planning Systems, Inc., under the auspices of the Local Agency Formation Commission for the County of Los Angeles. Once it is publicly released in late June, it should be the final tell- all on this issue with its in-depth analysis and projections of revenue and expenditures for the proposed city.

One aspect of the economy in East L.A. that needs to be included in the CFA analysis is the “informal economy,” those business enterprises that operate with little or no regulation and that would not formally contribute to the proposed city’s revenue streams. They are the unlicensed or unregistered cash-only businesses, etc., that make up a significant portion of the community.  Yes, it is a sensitive issue but one that needs understanding in framing a complete and accurate picture of the local economy, as finding an effective treatment of such activities would be requisite to developing a sustainable city.

So onto the harsh realities that come with being an unincorporated, low-income, minority community, gets thrust, again (last time in 1974), the issue of incorporation. If the economics are where they need to be this time, city hood may be on the table. If not, it will be a hard lesson learned on the two-pronged implement that is socio-economic justice, one of “truth” and one of “power. ”

C.J. Salgado is an East Los Angeles resident.





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One comment

  1. Truth-Seeking East L.A. Resident

    As this article predicted, the results of the CFA show clearly how difficult it will be to make a case for cityhood– the economic basis is just not there.

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