Higher Valley Breakup Fee Is Estimated

To avoid raising taxes or cutting services, the city of Los Angeles would need $288 million a year from the San Fernando Valley if it became a city, according to a new report commissioned by Los Angeles government officials.

That estimate is sharply higher than the one adopted by the state agency that cleared secession for the November ballot.

Los Angeles City Council members voted 13-1 on Tuesday to send the study to the Local Agency Formation Commission, the agency that put Valley secession on the November ballot. That agency found that the estimated payment from the Valley to the city would be $128 million a year.

The size of the payment in part reflects the Valley’s financial health and the differing estimates do not affect the ballot measure, which already has been approved by LAFCO. But the debate over how much money would be needed to compensate the city for the loss of the Valley continues, as city officials who oppose secession maintain that it would hurt the city that is left behind.

As secession supporters and critics debated the latest estimate, a city commissioner announced that he was quitting his post on the Los Angeles Ethics Commission to join the secession campaign. The city attorney’s office has held that ethics panel members may not campaign for secession or contribute to it financially.

“I feel I must now fully engage in the campaign for Valley cityhood,” David Fleming said at a news conference at the Sportsmen’s Lodge in Studio City. “I cannot, nor will I, sit on the sidelines at this critical juncture in the history of the Valley and, indeed, all of Los Angeles.”

Before Fleming, a lawyer, served on the commission, he said he contributed “well north of” $100,000 for a state study that determined Valley secession is feasible. Fleming said he plans to donate money toward secession, help with fund-raising efforts and participate in the campaign.

The 46-year Valley resident, whose move was welcomed by secession backers, said he supports the breakup because he believes that a smaller government provides residents with better public services and more local control.

Asked about the city’s latest estimates regarding the financial implications of the breakup, Fleming said he was not concerned because the state study of the breakup is complete, so the new analysis will not affect the ballot measure that voters will consider on Nov. 5. They also will vote on a proposed Hollywood secession the same day.

Jeff Brain, president of Valley VOTE, the group spearheading secession, dismissed the council vote as a ploy to create doubt among voters. “The city is playing with numbers,” he said. “[Council members] are trying to protect their empire and bureaucracy at all costs.”

“As we look at the possibility of amputation in November, I think it’s important to have more than rough estimates,” said Councilman Eric Garcetti. “This shows us that the [proposed payment] is nowhere near what it ought to be.”

Councilwoman Wendy Greuel added: “We need to have individuals make educated choices about what will happen if secession passes or doesn’t pass.”

LAFCO Executive Director Larry Calemine, whose agency produced the lower estimate, declined to comment, saying that neither he nor his consultants have had time to review the documents.

The new analysis was conducted by Hamilton, Rabinovitz & Alschuler Inc. for $92,000 on behalf of the city.

In addition to educational purposes, the document could be used to show that the city exhausted its administrative appeals if it were to sue the agency.

The annual payments from a new city to the city that it left are necessary to meet state requirements that incorporation or secession efforts are “revenue neutral,” or don’t cause harm to either body. In Los Angeles’ case, everyone agrees that there must be a large payment from any new Valley city.

However, the number of city employees that can be cut--and therefore the exact alimony figure--remains up for debate.

Edward K. Hamilton, chairman of the consulting group, said that LAFCO took a “meat cleaver approach” and simply lopped 27.5% out of all city agencies to reach its figure.

“This is a job for a scalpel,” Hamilton said, noting that he and his group looked at all of the city’s 43 agencies--position by position--to see how many jobs could be cut without affecting city services.

They decided that 7,515 positions could be cut--nearly 1,700 fewer than LAFCO’s figure. Those positions led to the extra $160 million in annual payments.

Hamilton also said that those payments should continue, not shrink to zero in 20 years.

“There’s no reason to decrease it,” he said.

Councilman Nate Holden was the lone member who voted against sending the report to LAFCO, saying that the city ought to allow the voters to decide the matter in November.

Councilwoman Cindy Miscikowski said the new documents will help voters make an educated decision.

“This is not saying, don’t put anything on the ballot,” she said.

“This is saying ... safeguard the citizens, voters, taxpayers in both areas, in all areas,” she said. “Make sure the new city is fiscally viable and the remaining city is not harmed.”