Chartering a New Course

Tuesday’s municipal election was only the first of many steps to define the future of Los Angeles--and, by extension, all of Southern California.

The key issue on the ballot was Proposition 8, to open up Los Angeles’ 72-year-old city charter to a reform process that will take two years. Although victory was not yet decided on Tuesday evening, Proposition 8 was passing overwhelmingly, thanks especially to voters in the San Fernando Valley.

The Valley’s business community and most of its 1.3 million residents strongly backed charter reform. Valley residents even fielded their own slate of candidates for the reform commission that will work out a new charter before the end of 1999. Final membership on that commission won’t be decided until run-off elections on June 8.

Then the real work will begin of revising the governance of California’s largest city. Reforms being discussed would give control over zoning and land use to local communities, along with responsibility for some local finances.

Regional issues such as airport expansion and other large matters would be left to the mayor and City Council, although their responsibilities would be redefined by the new charter.

Charter reform is overdue. The city’s charter was last revised in 1925 and since then has grown amendment by amendment to 892 pages as the city itself grew into a populous giant. Los Angeles long ago became too dispersed and diverse for micro-management from City Hall.

Yet the city as a unifying body for the major purposes of national and global position and regional infrastructure of ports and airports makes sense. Marrying decentralized initiative with central authority will be the important task of charter reform.

But reform is not a slam-dunk. The current City Council mostly opposed Proposition 8, as did municipal unions--although some Valley council members supported it.

Yet successful charter reform is critical. Without it, Los Angeles could very well disintegrate into separate cities, say knowledgeable city officials. The situation is tense, so we should understand just what business and local taxpayers want.

For business, a priority is reduction of overhead--not merely taxes but the whole exaggerated cost of government in the city.

Companies in Los Angeles must pay at least double the taxes and fees of comparable businesses in almost all of the county’s 87 cities, not to mention cities in Orange and other counties.

This uncompetitiveness is acutely felt in the Valley because adjacent Burbank and Glendale have been able to attract entertainment industry investments. North Hollywood and Sherman Oaks would like to attract movie company offices and operations, but they’re hampered by Los Angeles’ costs.

And now tiny Calabasas, at the Valley’s western end, has begun to attract entrepreneurial start-ups.

Valley business people even look longingly at San Fernando, an independent city of 26,300 in the northeast Valley. San Fernando, one of the oldest cities in Southern California, is home to a low- to moderate-income population that is 85% Latino. It is also well-governed and independent, an example for charter reform commissioners to study.

“San Fernando’s secret is responsiveness,” says its mayor, Raul Godinez II. “We repair potholes within two days and our police department has a two-minute response time.”

*

San Fernando, whose young people are threatened with gang problems, has put a premium on crime control. The city has 35 full-time police officers and more than 40 volunteer police reserves, who earn $1 a year and help the city function smoothly.

Sales taxes from local Sam’s Club, Office Depot and other “big box” retailers help pay for police.

And being independent helped it negotiate for a rail station.

“Transit is important for our people,” says city administrator Mary Strenn.

Proof of San Fernando’s success is next door in Pacoima, which asked a few years ago to leave L.A. and be annexed by San Fernando. Pacoima businessman Walt Moser, founder and chairman of Precision Dynamics Corp., helped lead that attempt and says today he would “love to have my company located in San Fernando.”

Moser’s company, a 350-employee, $30-million-revenue maker of wristbands for hospital patients, is in an enterprise zone and so pays lower taxes. Still, he says, San Fernando’s responsiveness would benefit his business.

Annexation could come about eventually.

The San Fernando Valley made a bid to secede from Los Angeles last year and will surely make another attempt if charter reform is not pursued vigorously. The Valley’s secession would be followed by that of San Pedro-Wilmington and the Westside.

And that would be disastrous. A dismembered Los Angeles would find it harder to achieve objectives than it does now. Breakup would deepen the divisions between well-off and poorer communities. All Southern California would suffer.

*

A strong Los Angeles is needed as a global beacon for the communities of Southern California. Now the city is not so much strong as simply big. It needs reform to truly take its place among the Tokyos and Londons of this world.

To bring about that brighter future, Valley business leaders are pushing the compromise of charter reform. “We could institute a borough system to allow more local autonomy, “ says David Fleming, a Latham & Watkins attorney and a Valley community leader.

“There are models for local autonomy in Toronto and London,” says economist Shirley Svorny of Cal State Northridge.

Curiously, business leaders in the rest of Los Angeles have been publicly quieter. The Los Angeles Business Advisers, whose 23 members are chief executives of major companies, is contemplating hiring a consulting firm to draw up suggestions for charter reform. But the executives took no formal position on Tuesday’s ballot measure.

Maybe Valley business people, being on the front lines of both the competitiveness and the secession questions, understand the urgency.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Unequal Taxes

Businesses in the city of Los Angeles pay markedly more in taxes than do firms in other Southland cities. Professional office taxes illustrate this disparity. But the amount of tax doesn’t necessarily mean more city services per resident.

*--*

CITY PROFESSIONAL CITY SERVICES OFFICE TAX* PER RESIDENT Los Angeles $61,316 $513 San Fernando 13,240 286 Anaheim 5,027 389 Fullerton 2,800 301 Burbank 860 680 Calabasas 0 343

*--*

* Annual tax for the first $10 million in receipts or the first 100 employees

Source: “Kosmont Cost of Doing Business Survey”