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Saturday, September 20, 2014

Open Discussion: A vision of East L.A. cityhood overwhelmed by perfect storm of realities

Photo by C.J. Salgado

By C.J. Salgado

Sadly, but not surprisingly, a “perfect storm” is making landfall on January 25 when the Local Agency Formation Commission (LAFCO) is set to make what will likely be the final decision on the proposed incorporation of East Los Angeles. LAFCO is the county agency charged to determine if a proposed new city can be created. To that end, LAFCO must determine if a proposed city is “financially viable.” At its upcoming special meeting, LAFCO’s Executive Officer will present its final report to the commissioners. An advanced copy, just released, concludes that “East Los Angeles does not generate enough revenue to sustain a healthy and financially sound city. The Executive Officer recommends that the Commission disapprove the incorporation request.”

The current incorporation effort has been ongoing for about four years, while the formal application for incorporation to LAFCO was made in April 2009 by the proponents, a group known as ELARA. As a lifelong resident of East L.A., I was deeply interested in this issue from the beginning, spent considerable time researching it and even volunteered in the effort for some time. However, as I analyzed the relevant issues in the context of the “rules” that applied, it became clear to me early on that there were fatal flaws that threatened the outcome and left no other conclusion than that which is now being borne out as this proposal sunsets. You see, the perfect storm that derailed this effort came in several fronts which were critical issues to the success of this effort:

  • The Economics:  the Great Recession which began in December 2007 was a game changer. Although it is officially “over,” its lingering effects have left their mark, as we know, with protracted detriment to employment, the housing/construction sectors, foreclosures, property values, and, perhaps most importantly, to government coffers. Cities adjacent to East L.A. have taken a beating. For example, Montebello seeks recovery from cash flow problems and large budget deficits that put it at risk for bankruptcy. Monterey Park, too, had to deal with multi-million dollar deficits putting the pressure on main services which could be “severely impacted,” as its mayor once said. In the end, the final Comprehensive Fiscal Analysis done for LAFCO and reviewed by the Office of the State Controller, confirmed that financial viability was simply not realistic for East L.A. at this time. That such forces would not be dispositive on the question of viability for East L.A. would be fantasy.
  • The Proponent’s Platform: Back in the Fall of 2007, the proponents sponsored an Initial Fiscal Analysis (IFA) that was to make a preliminary determination of fiscal viability. As a result, the proponents took up a platform of (a) city hood is economically viable without a tax increase, and (b) city hood is economically viable without a reduction of services. Despite the underlying economics screaming to them that this was simply an untenable position in light of the recessionary environment, the proponents carried that flag forward to this day, an erroneously held belief. That mistake cost them dearly in terms of credibility for, what many have said, their “pushing” that platform on to those it hoped to convert in favor of incorporation without acknowledgement of reality. The financial reviews by competent authorities point to the very opposite– increases in taxes or cuts in services would be undeniable. How could they not be with East L.A. projected to run an accumulated deficit of almost $60 million dollars in its first five years of existence?
  • An Exclusive Consensus: The incorporation effort never really gained widespread support. Throughout the effort, complaints of feelings of disconnection arose by many in the community who had never heard of the current proposal, the few meetings that took place or what the relevant issues were. Meetings were largely poorly attended with most of those who did attend being the “regulars” that actively followed the issue, politicians or their staffers, or students learning about civics. Attendance at meetings just did not reflect the community at large with far less than 1% of registered voters showing up.
  • The Social Media Snafu: Despite the modern venues offered by social media for getting out the word, communication proved ineffective. Not many knew about the incorporation effort or the associated issues. I saw this first hand when going door-to-door on behalf of the proponents and in the plenitude of conversations I held subsequently with members of the community. At meetings, this problem was often raised in some shape or form. I recall one meeting where finger pointing raised the matter of who was responsible to inform the community of meetings on incorporation, the proponents or the county? The proponents website (www.cityhoodforeastla.org), for example, simply, for whatever reason, was not kept up to date with big gaps in coverage of the issues and progress and largely one-sided, particularly once things started going south. Unlike the “occupy” movement, the incorporation issue did not gain firm traction in the social media. The proponents did not leverage this enough and, perhaps, East L.A.’s social media preferences were not amenable.
  • The Business Case: For the most part, the business community in East L.A. was either against incorporation or indifferent to it. Why? Well, because there is something to be said about running a business in the “wild wild east” environment of East L.A. It’s cheaper and you get left alone. That can be an appealing proposition to a business, especially of the small mom and pop variety which abound in East L.A. Those businesses that operate in the “informal economy” of East L.A. would likewise be averse to incorporation from that perspective. Then there is the significant specter of increased business taxes and tightened regulation under a new city, which would fall squarely on the backs of small businesses that are struggling to survive. Take a drive along Whittier Boulevard and count the vacancies. That’s a real threat to a business. I spent some time as a volunteer approaching businesses on behalf of the proponents for donations to the cause. There were many rejections, few agreements on principle, and not many donations. That prevalent resistance prevailed in the business community.

So, now we wait for January 25 to come and LAFCO to rule. But that is just a formality. Visioning has merit, but it must be tempered by the realities.

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One comment

  1. The 1/25 LAFCO meeting on the proposed incorporation of East L.A. was continued to 2/8, after much public comment and the Executive Officer’s recommendation to disapprove based on a lack of fiscal viability for the proposed city. In an advance copy just released of the Executive Officer’s staff report for the upcoming 2/8 meeting, LAFCO’s Executive Officer again reaffirms more strongly the recommendation to the Commission to disapprove the incorporation petition, after addressing in the report issues raised at the 1/25 meeting. It is likely that the Commission will adopt the recommendation and disapprove incorporation for East L.A. at the 2/8 meeting. If that happens, an individual can file to request a “reconsideration” of the determination until March 9 but must pay $4000 and offer a “new” factual basis warranting reconsideration. The Commission’s ruling on any reconsideration would be final at that point.

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