Valley Could Split From L.A., but at a Price, Study Says

The San Fernando Valley could survive as a robust independent city, but would need to pay at least $68 million a year in “alimony” to the rest of Los Angeles to achieve the breakup, according to a landmark report released Wednesday.

The “strong and diverse tax base” of Encino, Northridge, Studio City and the rest of the Valley would produce enough revenue--more than $1 billion a year--to cover all city functions, pay the alimony and still leave a surplus, the study found.

But the report--a long-anticipated document drafted by the agency charged with supervising the breakup proposal--concluded that many key functions, such as delivery of water and power, are so intertwined that they could never be separated from the city of Los Angeles.

The report lays the groundwork for the possible dismantling of the nation’s second-largest city, which would be a stunning reversal of 142 years of nonstop expansion that defined urban sprawl in America.

Secession is far from certain, but the report makes it much more likely that the question will be put to a vote of the city next year, when majority approval in the Valley and in the city as a whole would be required for passage. Polls have shown support for secession in the Valley, but not citywide.

The report is packed with politically explosive findings that will spur and shape the debate over whether voters should let the Valley secede from the city it joined in 1915.

Most important, the document confirmed the suspicions of separatists that the Valley subsidizes the rest of Los Angeles. The subsidy this year, the study found, totals $123 million.

Both the report and its author, the Local Agency Formation Commission, or LAFCO, were quickly attacked by secession foes.

“LAFCO is a very prejudiced source,” said Mayor Richard Riordan said. “LAFCO is very political. It’s made up of people who have axes to grind, who support the secession. I come back to the moral issue. I think it is just downright immoral to abandon the poor people of this city.”

Secessionists, who have sought independence for decades, hailed what they found useful in the report.

“What we are learning is that the Valley has been shortchanged for years,” said former Assemblyman Richard Katz, a board member of the Valley VOTE secession group.

“I feel taken,” said J. Richard Leyner, chairman of the United Chambers of Commerce of the San Fernando Valley.

The study also offered a richly detailed blueprint for breaking apart Los Angeles. It allocated parks, libraries and police stations the way a divorce judge would split a couple’s household assets.

The Valley, for instance, would get two of the six helicopters used by the Fire Department for water dropping, ambulance flights and earthquake reconnaissance.

But after 86 years as the northern region of Los Angeles, the Valley is so tightly entwined with the rest of the city that it would have to rely on Los Angeles to run its water, power, sewer, computer, pension and 911 emergency dispatch systems, the study concluded.

Backbone of a Secession Proposal

The report, triggered by petitions signed two years ago by 202,000 Valley voters, will be the backbone of a secession proposal that could go before voters in November 2002.

Its central finding--that a Valley city is fiscally viable--makes an election more likely than ever.

“It would appear that, at this point in time, they have an opportunity to be successful if they wish to secede,” said Henri F. Pellissier, chairman of LAFCO, which will decide whether to call an election. “I think that’s what the bottom line is--that there’s enough money there for them to do it.”

An election seems a foregone conclusion to LAFCO member and Los Angeles County Supervisor Zev Yaroslavsky.

“Ultimately, the people will make this decision. We owe it to them, and the city of Los Angeles owes it to us to get this thing to the ballot for the people to vote on by November of next year,” he said.

But secession opponents, including the unions representing the city work force, are sure to mount a vigorous campaign--and perhaps court challenges--to block any breakup.

On a visit Wednesday to Sherman Oaks, the mayor cast the issue as a class conflict.

“If we have a moral conscience--and I have to believe that the people of the Valley and the people of Los Angeles have a moral conscience . . . they will vote against secession,” said Riordan, who has opposed the breakup with increasing determination in recent years.

Secession supporters framed the issue in equally stark terms.

Jeff Brain, president of Valley VOTE, called on Riordan and the City Council to “respect the people’s right to democracy and compassionately let the people of the San Fernando Valley go.”

The 370-page study was written by analysts at Public Financial Management Inc., a consulting firm hired by LAFCO. The firm could substantially revise the report, which cost $1.4 million, later this year.

When it decides whether to put secession to a vote, LAFCO will also rely on findings and recommendations by its executive officer, Larry J. Calemine, a co-founder of an earlier Valley secession movement that collapsed in the 1970s.

Among the study’s key findings:

* The Department of Water and Power, the nation’s largest municipal utility, could not be divided. The Valley city would have to contract with Los Angeles for the services the agency provides.

LAFCO has the legal power to order Los Angeles to provide power to Valley customers at the same rates it charges in Los Angeles, according to the report.

The water issue was less clear. The Los Angeles City Charter, the study found, would allow the city to sell water to the Valley upon approval by Los Angeles voters. The report concluded that water rates would “not materially deviate from” what the DWP charges its Los Angeles customers. It did not address suggestions by city officials that Los Angeles could charge higher rates in the Valley.

* The Valley city would need to pay $68 million in “alimony” each year to what remained of Los Angeles to keep the old city financially whole, as required by law.

The payment could have been as high as $123 million. But because the Valley city would not own any of the DWP, about $55 million that Valley ratepayers contribute to the city budget through their water and power bills would stay with Los Angeles.

* The report warned that start-up costs for the new city “could be substantially higher” than the $13 million the state would provide by law. It said the Valley city might need “revenue enhancements” or service cuts to close any deficits. It also said the Valley city could be liable for a share of damages stemming from Rampart police corruption cases.

* Los Angeles would need to keep its airports, including the one in Van Nuys, because of federal restrictions and bond agreements.

* The Valley city would acquire 8,564 of the 34,607 municipal employees of Los Angeles. Under state law, none could be laid off and all union contracts would have to be honored. The work force that remained with Los Angeles would include 473 employees dedicated to serving the Valley city under contract.

To assess whether a Valley city would be financially viable, the report also had to consider the existing division of income and services between the Valley and the rest of Los Angeles.

The findings lent substance to one of the underlying rationales for the secession debate.

The report found, for instance, that the Valley generates more than a third of the sales tax revenue that pays for DASH buses and yet has just 7% of that service’s routes. Similarly, Valley residents paid for more than their share of animal regulation services, street repairs and police services. Fire Department stations and staff are allocated less controversially.

Those findings quickly sparked further debate. Secessionists saw the disparity in police officers as clear evidence of bias against the Valley in the allocation of services.

Valley VOTE Chairman Richard Close cited the report’s finding that about 25% of all Police Department personnel and 27% of those assigned to field units are allocated to the Valley.

“It’s shocking,” he said. “The report verifies what we have suspected all along--that services are being directed to other parts of the city.”

Pointing to police deployment, he said: “How can you patrol the sixth-largest city on 700 officers? No wonder crime is escalating.”

Others disagreed. County Supervisor Yvonne Brathwaite Burke, another LAFCO member, questioned the conclusion drawn by many secession backers that the Valley was not getting its fair share.

“Obviously, police go where there’s higher crime,” Burke said. “Now, do you determine fair share based on population, or by the level or crime in the community?”

LAPD spokesman John Pasquariello said deployment is based on crime as well as population. The Valley had 86 homicides last year, 14% of the citywide total of 620.

With the report filled with such data, some secession supporters argued that it would be unfair to punish the Valley by requiring a payment equal to the subsidy the Valley has already been paying.

“We shouldn’t have to pay again for services we didn’t get,” Leyner said.

Mayoral spokesman Peter Hidalgo challenged the numbers from a different perspective. He said that the raw numbers are subject to change once the city reviews them and that they don’t give a full picture of whether resources are fairly distributed.

“The mayor believes it would be premature for anyone to conclude that this indicates the greatest part of services are not going to the Valley,” he said.

Hidalgo noted that much of the city’s business is concentrated downtown, where Valley people as well as others use the DASH system.

William T. Fujioka, director of the city Office of Administrative and Research Services, has ordered managers of every city agency to devote their “full and immediate attention” to answering questions raised by the study.

*

Times staff writer Annette Kondo contributed to this story.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

One City or Two?

A landmark study of the potential divorce of the San Fernando Valley from the city of Los Angeles concludes the new Valley city would be economically vibrant but could not cut many governmental ties to Los Angeles.

Source: Public Finance Management Inc. and the Local Agency Formation Commission for Los Angeles County

What Comes Next for the Valley City Proposal

The fiscal study of San Fernando Valley secession from Los Angeles is a key step toward breaking apart the city. These are the next steps:

* Applicants for Valley secession file their final “divorce plan” within 45 days.

* The city of Los Angeles then has 45 days to file a response.

* Late this year, the Local Agency Formation Commission releases a revised fiscal study, which the state controller may audit.

* LAFCO’s executive officer, Larry J. Calemine, issues a report with findings and recommendations on the secession proposal.

* LAFCO, an autonomous nine-member commission, holds public hearings.

* By early 2002, the panel votes either to reject the proposal, which would terminate the secession proceedings, or to put it on the November 2002 ballot. The commission can make Valley secession subject to conditions, such as “alimony payments.” The panel would also set the boundaries for at least 14 City Council districts in the proposed Valley city.

* Protest hearings would be held, but would be moot unless at least half of the Valley’s 581,000 registered voters filed written protests.

* Secession would occur only if approved by both a majority of voters in the Valley and a majority of voters citywide. A mayor and City Council for the new Valley city could be elected at the same time.

* If court action or other delays prevent the proposal from getting on the November 2002 ballot, it could not legally be put before voters until March 2004.

* Proposals for secession by Hollywood and the harbor area are following a parallel track at LAFCO and could be put on the ballot at the same time.