LAFCO Feels Heat From All Sides

The once-obscure agency set to decide Wednesday whether to call a citywide election on San Fernando Valley secession has come under fire from all sides over the methods it used to craft a breakup plan.

The Local Agency Formation Commission, a state-empowered panel that typically handles minor boundary shifts, has never before tried to divvy up a major city. And in drafting a plan that could go before voters in November, the commission has repeatedly changed directions and left key questions unanswered.

Most of the unknowns have to do with the longer-term financial health of a Valley city and the shrunken Los Angeles it would leave behind.

The report before LAFCO this week envisions the Valley as a contract city that would depend on Los Angeles for all municipal services, at least for the first year. That approach, which defenders say was the only realistic way to address the complexity of the proposed breakup, shaped LAFCO’s conclusions in each of its secession analyses, leaving dissatisfied observers on all sides.

But experts say it is not up to LAFCO to eliminate every uncertainty that arises in the dismembering of a city of 3.7 million people. They also say the political battle over secession makes it inevitable that LAFCO’s work, no matter how thorough, will be subject to heated second-guessing.

“This is going to live in a glass house,” said Jaime Regalado, executive director of the Pat Brown Institute for Public Affairs at Cal State Los Angeles. “Everything’s fair game. It’s always going to be messy, especially when the stakes are this high.... There’s no cookbook for how to divide up the city.”

Barring a successful court challenge, LAFCO has the last word on whether, and in what form, secession proposals for the Valley, Hollywood and the harbor area reach the ballot. Its decisions on the Hollywood and harbor measures are due in the next two weeks.

The agency has spent more than two years and $2 million analyzing breakup plans. It has sampled a variety of recipes. First, it designed a wholesale split between the Valley and the rest of the city, only to abandon that approach for a simpler model. It has changed payment estimates over and over again, but the city still contends the calculations are off by tens of millions of dollars.

Lawsuit Threats and Anger in Harbor Area

Los Angeles Mayor James K. Hahn has hinted that the city might sue over the Valley breakup plan, and even some secessionists--particularly those from the harbor area, which LAFCO has thus far judged incapable of supporting itself as a separate city--are questioning how the agency reached its conclusions.

In the harbor area, LAFCO has used so many different projections that the area’s apparent budget deficit shriveled from $51 million a year to $6 million, and it could shrink even further if LAFCO relieves the harbor’s debt payments.

Experts say that the zigzagging path can be traced to LAFCO’s roots. The state Legislature created Local Agency Formation Commissions in 1963 to manage growth in each county. The commissions are filled with a hodgepodge of political appointees, from county supervisors and city council members to water district directors.

State law offers basic guidelines--for example, secession plans must preserve the fiscal health of both the existing city and any new towns carved from it--but LAFCOs can set additional rules as they go along.

“They’re supposed to be looking at it in a neutral way,” said William Fulton, an urban planner who has written books about Southern California sprawl. “But this is a commission made up of local politicians, so it’s going to be political. And the Los Angeles County LAFCO has a history of being especially political.”

The commissioners leave the number crunching to hired hands. To judge whether each proposed city’s revenue would cover its expenses, LAFCO turned to Public Financial Management Inc., a consulting firm with experience studying secession plans in New York state.

The biggest challenge was the Valley, whose 1.35-million population is almost 10 times larger than that of the proposed harbor city and seven times that of Hollywood. Midway through their analysis, the consultants scrapped their original plan to divide the city’s assets. Gone were the neat calculations that gave two of the Fire Department’s six helicopters and 8,564 of 34,607 municipal employees to the Valley.

Instead, LAFCO decided it made more sense to design an independent Valley as a contract city.

The Valley would hire Los Angeles, the very city it’s trying to escape, to provide all municipal services for at least one year. To compensate Los Angeles for lost tax revenue, the Valley would have to fork over an annual “alimony” payment.

Then came the avalanche of data from both camps. That led to wildly different price tags for the secession plans, depending on who did the math.

At the moment, LAFCO says the Valley’s alimony payment should be $55.8 million. But that calculation has been adjusted more than 10 times, and the amount is expected to jump again today.

“This is like ‘The Wizard of Oz,’” complained Deputy Mayor Matt Middlebrook. “Now is the time we’ve got to go behind the curtain and look at the real numbers. If this has been based on phony math, [Valley taxpayers] will find themselves drowning in red ink very quickly ... and the remaining city is going to have a huge hole in its budget.”

The city came up with a much higher alimony figure: $306 million per year. Then, its consultant rejiggered the balance sheet and reduced the number to $153.8 million--but only for the eight city agencies it had time to analyze.

Even minor calculations had major consequences. LAFCO and the city disagreed on whether fractions should be rounded up or down. For the Valley, the difference was the equivalent of 147 jobs--more than the staffs of the Department of Emergency Preparedness, Environmental Affairs and the City Council combined.

“It’s not exact, but it doesn’t need to be,” said Shirley Svorny, an economics professor at Cal State Northridge who favors secession. “If your benchmark is that you can’t break up if you can’t find every penny, then you can never break up.”

The city certainly did have trouble finding its pennies. About a quarter of its revenue couldn’t be traced geographically, making it hard to earmark the proper share for areas seeking to break away.

Meanwhile, LAFCO commissioners chastised the city for either stonewalling when asked for information or dumping 100-page reports on the agency at the last minute.

“We’re almost entirely dependent on the city of Los Angeles for data, and they’re not a willing party to this,” said Craig Hoshijima, a consultant who helped LAFCO analyze the secession proposals. “That’s made it extremely difficult.”

Exact Figures Hard to Come By

To estimate the price of city services, LAFCO used the percentage of Los Angeles workers serving each area. That left the new cities looking like bite-sized versions of Los Angeles.

Harbor area secessionists argue that LAFCO should instead design a small-town city from the bottom up. They want to eliminate some big-city departments. So in the latest go-round, LAFCO did just that. Executive Officer Larry Calemine found that the proposed city could shave about $21 million from its budget.

He also switched tracks on the harbor area’s contracting plans. Calemine determined that the region could save money by contracting with Los Angeles County instead of the city.

But exact figures were hard to come by. For firefighting, LAFCO applied general county billing rates. For animal control, it used Santa Clarita as a model. For libraries, it relied on a per-capita cost estimate.

“We stand by all the calculations,” Calemine said.

LAFCO again concluded that a harbor city would outspend its income. Calemine recommended against putting it on the ballot--but then came back the following week with more ideas for making the numbers pencil out.

Several LAFCO commissioners, meanwhile, have voiced their desire to get the breakaway proposals--each prompted by petitions from 25% of voters in the affected area--onto the ballot.

At LAFCO’s last board meeting, one commissioner likened secession to the populist glory of the American Revolution. Invoking the Boston Tea Party, retired Judge James DiGiuseppe declared that the colonists overcame “great odds” to beat the British.

Like the secessionists battling a reluctant Los Angeles, he concluded, “The people decided, ‘We’ll make it work no matter what.’”

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