Gold, Perhaps, in the Land

There are 7,602 municipally owned parcels of land that are not on the tax rolls in the big city of Los Angeles, and they might be worth as much as $2 billion. Just utter the words and you’ll quickly understand why they carry such mellifluous tones in the minds of Mayor Richard Riordan and the City Council.

The idea of a big influx to the general fund from the sale of some of those parcels (not to mention an expansion of the tax rolls) makes sense. In the area of public safety, for example, the city faces hard choices: putting a public safety tax on the November ballot seems to have been tabled; the city might still lose federal crime-fighting matching funds; the Los Angeles Police Department has vast needs in terms of equipment for its officers. Selling city-owned land could offer considerable help here.

But there are many caveats, and the Orange County bankruptcy offers sobering lessons. In June 1995, Orange County tried to auction 19 properties, with the goal of raising $30 million. It brought in less than one-third of that amount after many bidders presented unacceptably low offers. Los Angeles, in far less desperate straits, could expect to command better offers, but perhaps not as much as it would hope.

It’s also troubling that the City Council has voted to take half of the proceeds from land sales to pay for community improvement projects in individual districts. This in a time when a united city should dedicate land sale proceeds to the greatest overall good. Moreover, these sales are already subject to many restrictions. Under state law, for example, the city must first take 35 administrative steps (there used to be 60), such as first offering land to transit agencies and school districts. Don’t forget that the L.A. Unified School District is getting money to reduce class sizes and might be in the market for a few new properties.

In some cases it would be inappropriate to offer up prime parcels of real estate; sale of land in the Santa Monica Mountains, for example, might lead to too much development.

What the city needs to do is to quickly determine two things: whether that $2-billion figure is accurate, given the local real estate bust, and which of the 7,602 parcels offer the most promise for sales to private buyers. In that regard, it’s laughable that the city has just two real estate experts and a few clerks for the task. Hiring more people clearly falls into the category of spending a little to potentially make a lot.