20-Year ‘Alimony’ Proposed for Valley

A panel setting terms for a proposed San Fernando Valley secession recommended Monday that the new city pay Los Angeles $563 million in “alimony,” spread out over 20 years.

The payments would start at $65.8 million annually and decrease by 5% each year until 2022. They would make Los Angeles financially whole after a breakup, representing the taxes that Valley residents had paid in excess of the value of services they received.

The alimony plan by a Local Agency Formation Commission committee offers Los Angeles far less than the $305 million a year in perpetuity that the city had sought.

Valley VOTE, the pro-secession group, also did not get all it wanted. It had urged the committee to impose a 10-year limit on the payments.

The City Council’s top analyst, Ron Deaton, denounced the plan as “voodoo economics.” He said it vastly underestimates the lost Valley tax revenue.

The LAFCO panel rejected Deaton’s proposal that an independent Valley pay $285 million annually--in addition to alimony--to maintain certain centralized services, such as the police dispatch system. Los Angeles officials say they would not be able to reduce those services after secession, even if the Valley no longer used them.

Deaton also said the plan by the LAFCO committee fails to account for $30 million that Los Angeles would lose in taxes on property transfers.

LAFCO Executive Director Larry Calemine, however, said the $30 million would be covered in the $65.8-million payment.

Calemine also said he will recommend that LAFCO require Los Angeles to provide water, power and sewer service to a Valley city at the same rates charged to the rest of Los Angeles.

He based his decision on a legal opinion given Monday by County Counsel Lloyd W. Pellman, who said LAFCO has the authority to cap post-secession utility rates.

That finding contradicts a legal opinion issued by Los Angeles, which says the city would retain the right to charge Valley residents higher rates.

The LAFCO panel delayed action on a proposal that a Valley city not be required to set up a civil service system similar to that of Los Angeles. The committee tabled the matter after the heads of two city labor unions claimed the proposal would reduce worker protections common in government service.

Meanwhile, Mayor James K. Hahn on Monday asked the state controller’s office to conduct reviews of LAFCO financial studies of Valley cityhood and an independent harbor area. The City Council had requested the reviews on Friday.

Hahn followed the council’s lead after Controller Kathleen Connell said her office could complete the reviews within 45 days. That would ensure that the secession measures could be on a November ballot.

LAFCO must decide by April whether the cityhood bids for the Valley, harbor and Hollywood should go before voters in November.