Hahn Warns Secession Could Hurt Public Safety

On the eve of a key vote over San Fernando Valley secession, Los Angeles Mayor James K. Hahn warned Tuesday that breaking apart the city could compromise public safety by jeopardizing the construction of new bond-financed fire and police stations voters approved this spring.

The comments from Hahn, a leading secession opponent, came as advocates and critics wrestled with new estimates of the Valley’s financial health and the payments it will be obligated to make to Los Angeles if voters back the idea.

That report by Larry Calemine, executive director of the Local Agency Formation Commission, concluded that the Valley generates $98 million more in tax revenue than the city spends there. The city should also get $30 million in the loss of property transfer tax, he wrote.

To make Los Angeles whole for the loss of the Valley, the departing city would therefore have to pay $128 million a year, a sharp increase from the previously estimated $55 million, Calemine said.

Those numbers set the stage for today’s expected LAFCO vote on whether to authorize a November ballot measure to determine the Valley’s fate. Hahn has urged the commission to delay its vote.

On Tuesday, the mayor said LAFCO has not provided a mechanism for a new city to issue bonds already approved by the voters of Los Angeles.

According to Hahn, without the transfer of bonding capability, money from Proposition Q, a $600-million bond measure that passed in March, could not be used to finance the construction of a new police station and a bomb squad facility in the Valley, as planned. Seven Valley fire stations slated to be replaced with money from Proposition F, which voters passed in 2000, would face a similar fate.

“If the Valley is unable to issue debt to build these kinds of public safety facilities, who suffers?” Hahn asked during a morning news conference held in the city’s emergency operations center, four floors under City Hall. “The people in the Valley do.”

The mayor said upgrading the city’s public safety facilities is critical, noting that federal officials have recently warned about the possibility of another terrorist attack.

“Put simply, secession hurts public safety, it hurts emergency preparedness, it threatens the safety of people all over Los Angeles,” he said.

Tom Faughnan, senior deputy county counsel for the commission, confirmed that under the current proposal, a new Valley city would not have the capability to issue general obligation bonds previously approved by voters of Los Angeles.

“It wouldn’t carry over,” he said.

Secession advocates said they were not concerned, in part because they did not support the way Proposition Q was going to be spent.

“Once we become our own city, we’ll pass our own bonds, thank you very much, and we’ll base it on our own needs,” said Jeff Brain, president of the pro-secession group Valley VOTE.

However, Hahn said a Valley city might not have the credit rating to issue bonds, citing a May 16 report by the bond-rating agency Fitch Ratings that stated the financial health of a Valley city would be difficult to immediately ascertain. Secession supporters disputed the report, and said they believe a Valley city would be able to issue bonds right away.

“We have been consulting with bond-rating services that have indicated to us that we are an extremely profitable city and will have no trouble in raising money through bonds or other indebtedness,” said Richard Close, chairman of Valley VOTE.

With both sides focused on today’s LAFCO meeting, Calemine’s estimates emboldened advocates and critics alike. Secession backers said the new figures suggested that the Valley city would be financially healthy, with a more robust reserve fund than previously expected. By the end of the third year, the reserve would be 14% of the budget, wrote Calemine, who has been supportive of efforts to bring secession to a vote.

“It’s more viable than when we just had [projected] budget figures,” Calemine said.

But Hahn questioned Calemine’s calculations and urged the commission to delay a vote on whether to put cityhood on the ballot until the report can be reviewed. He predicted that residents in both parts of the city will face tax increases and service cuts if Los Angeles is divided.

“It seems to me that LAFCO is hellbent on providing a report that is favorable for Valley cityhood, without regard of the cost to the taxpayers, either in the new city or the remaining city,” Hahn said.

And the mayor argued that LAFCO may face a legal challenge if it does not reconsider its findings before authorizing a ballot measure.

“If they are failing to meet the standards that are set by state law, I think they’re open to a lawsuit,” Hahn said.

LAFCO members defended their work.

“I think we’re doing a good job,” said commission Chairman Henri F. Pellissier. “We’re following the law.”

Calemine refused to respond to the mayor’s comments.

“I’m not a politician and I do not respond to what politicians say,” he said. “I’m just a staff member trying to get my job done.”

The 29-page resolution Calemine submitted to the commission Tuesday for adoption stated that the split will not economically harm Los Angeles and will result in creation of a new city capable of providing efficient services.

Under the proposal, the amount the Valley would pay Los Angeles to make up for revenue lost in the split would start at $128 million the first year and decline by 5% each year for 20 years.

Los Angeles officials have said the city should be paid at least $153 million based on centralized expenses it would still have to cover after a breakup. But Calemine rejected the argument, saying Los Angeles should be able to reduce expenses if it has to serve one-third fewer people.

He also recommended that the new city begin operating July 1, 2003, rather than Jan. 1, as sought by secessionists. A one-year transition period would be set, during which the new Valley city would continue to contract for most services.