Thursday, October 8, 2009

LA WEEKLY ARTICLE: Los Angeles Corporate Welfare: Ritz-Carlton and AEG Rich entities siphon taxpayer money while real communities struggle

Published on October 07, 2009
South Central Neighborhood Council budget expert Daymond R. Johnson: Less than impressed by the new, luxury, taxpayer-subsidized Ritz-Carlton

...A thin, shimmering downtown tower, 54 stories high, wrapped in tints of blue, the nearly completed Ritz-Carlton Hotel & Residences and JW Marriott at L.A. Live. A short walk from Staples Center and the L.A. Convention Center, downtown’s newest asset is set to open in February 2010. From the days of Mayor Tom Bradley and through the years of his successors, Richard Riordan, James Hahn and Antonio Villaraigosa, L.A.’s political elite and city boosters have lobbied for what the Ritz-Carlton and its surrounding enclave embody: a long-sought luxury hotel for conventioneers, a centralized city, a populated downtown more like Manhattan.

L.A. Live is set to flourish, but the city is falling apart.

“I call it environmental racism,” says Daymond R. Johnson of South Los Angeles. “The streets leading into downtown have always been taken care of, but as you cross the 10 freeway and come south of downtown L.A., you begin to see the difference in the environment.”

“Environmental racism” might seem like hyperbole, but Johnson is a thoughtful neighborhood council member named by the California Democratic Party as Democrat of the Year for Assembly District 48. Johnson has represented the South Central Neighborhood Council on budget matters for the last six years. He works as a safety officer at a respected charter school.

He says that even such simple quality-of-life services as the synchronization of streetlights are handled differently in West L.A. than in his own neighborhood. Thanks to those double standards, he claims, “My neighborhood council area is one of the most deprived in the city of Los Angeles.”

Johnson, who lives in Councilmember Jan Perry’s district, notes that sectors of the city that have been starved, like South L.A., felt the budget pain long before any recession hit: “There was never a lot of attention to the area — so it would be an understatement to say that there have been cuts.”

Yet the city has, and is, aggressively pouring money elsewhere. Beginning with a deal signed on October 31, 1997, City Hall lavished millions of dollars in subsidies and tax credits on companies owned by Denver-based billionaire Philip Anschutz to fund the politicians’ downtown dream. City officials forced the poor out of 27 “blighted” acres of downtown around Figueroa Boulevard and replaced the aging neighborhood with lucrative ventures.

Although AEG’s Staples Center/Ritz-Carlton/L.A. Live endeavor will pay increased property taxes and sales taxes thanks to an expected growth in visitors to the area and its upscale hotels, L.A. taxpayers, who have poured so much of their public money into the deals, will not recoup the revenue from the lucrative hotel bed tax for 25 years. Thanks to agreements City Hall made with companies controlled by Anschutz, the 69-year-old recluse will keep pocketing these “bed” taxes — money that would normally flow to city coffers — until he is 95 years old and Villaraigosa and the City Council are long out of office.

A city-solicited study once boasted that taxpayers would reap $1.7 million annually from the bed taxes; in fact, Anschutz will see the first $62 million.

Moreover, instead of requiring the wealthy developer to secure private financing for the 27-acre project encompassing Staples, the Ritz-Carlton and L.A. Live, the city — meaning the Los Angeles public — provided an Anschutz company a $70 million, 25-year loan, which is being repaid on a yearly basis through Staples ticket sales.

Anschutz will not pay off that $70 million loan provided by L.A. taxpayers until 2025, yet public documents filed with the Los Angeles County Recorder’s office reveal that an Anschutz company has already sold off three significant parcels within the project area.

AEG took the revenue from the resale of the three parcels, a transaction allowed by the redevelopment agency, and then the city shifted the planned projects on that land over to new owners. Yet at least one of those key parcels contained lots seized by the Community Redevelopment Agency from a private owner, using the eminent domain statute, purportedly to fight “blight.”

The eminent domain takings in the area of what is now Staples and L.A. Live in the 1990s left many private landowners deeply embittered over being forced off their property at “market/fair value.” City Hall’s recent decision to let AEG sell seized lands means “they ‘flipped’ the property,” declares Marko Mlikotin, president of the California Alliance to Protect Private Property Rights. He calls the resale by private developers of lands taken via eminent domain “egregious.”

“The CRA was using public dollars to seize private properties. Shouldn’t that property revert to the original owner?” he asks.

It is almost impossible to tabulate how much money Anschutz made off the resale. Eminent domain was used in some form to take 107 of 152 lots around Figueroa, which were then consolidated into a huge property.

“Taxpayers are subsidizing these projects, but then developers and brokers are making huge profits.”

Many political insiders see AEG, its president and CEO Tim Leiweke, and Anschutz as comprising a shadow government that continually persuades City Hall’s leaders to funnel public money to downtown, at the expense of South Los Angeles, the Eastside, the Valley and several other areas.

In fact, although the Los Angeles public is not aware of them, huge, additional subsidies are about to flow to the L.A. Live/Staples area. With a push from Villaraigosa and Perry, $50 million is being taken from the state Housing and Emergency Shelter Trust Fund of 2006, bonds approved by California voters to finance housing for battered women and the poor — or so voters thought. But in Los Angeles City Hall, the pols sought $50 million from the bond, a large chunk of which they plan to spend on sidewalk and street amenities to dress up Figueroa Boulevard downtown — which feeds directly into AEG’s publicly subsidized lands. [Remember ZD's, "Prop 1C money for Emergency Shelter For Battered Women, Children, Veterans and Disabled being used for the Grand Ave Project, commercial, cement park!?!?" Looks like since Grand Ave Project is on "hold" (LOL!) the money is being used for another commercial function.]

Mlikotin believes that “sound redevelopment projects don’t require developers to feed at the public trough or require eminent domain to create profitable business ventures. When public agencies continue to offer subsidies, why would any developer want to pay full market price, when they know that the local CRAs will provide taxpayer funding?”

SIDE BAR EXCERPT: "It generally does not concentrate huge profits, or tremendous political power, in the hands of one developer, like Anschutz — or the New York–based Related Companies, the chosen megadevelopers for the currently stalled luxury Grand Avenue hotel and shopping project."

Full Article from LA

Related Reading by Zuma Dogg...his greatest work ever, in his opinion, including uncovering pension money was invested in Grand Ave Project (CRA) and that it would never get off the ground, which it hasn't but I was told I was conspiratorial and crazy and that it WOULD get off the ground. That was over two years ago. Now it is referred to as "stalled."

Saturday, June 9, 2007

Downtown Los Angeles Presents: Eli' Broad, Related Co., CRA, City Council and County's GRAND AVENUE PROJECT (Planning Details and Project Review)

You may have heard of the nearly $2 Billion Downtown CRA mixed use project called, LA LIVE. (A Ritz Carlton Condo/Hotel, Marriott Hotel, PF Changs, Movie Theaters, Specialty Retail and open space. [If you are a rich billionaire visiting from Asia, you will love investing in this area! If you are a business or organization planning a convention near the convention center, well you better try Vegas, this will price the city right out of the ballpark!]

Plus a few other minor issues I am concerned about: Like the fact that there is no wat the City can be serious about thinking they can build another Universal City Walk Type project near Staples Center. They might be able to get some of it approved and built, but this is "pie-in-the-sky" fantasy land talk.

So just when you think there isn't enough demand for more five start hotels, luxury condos (instead of a range of affordable, middle and upper level residential housing for workers in the area), you forgot to factor in the fact that there is another OVER $2 billion five star hotel, luxury condo, specialy retail, restaurant and open space project to compete with the minimal demand. It's called...drumroll please...because it really deserves a prodigious, magestic, regal, fantastic, tribute of an introduction...


THE SAVIOR OF THE CITY, REGION AND WORLD!!! We are just lucky to have it. (Or at least have the approval to start spending the money!)

What if the project never even gets completed? With only phase one agreed to, and even that has not been executed, who’s to say people can’t drop out, default, or what if City money doesn’t come through?

See also:

Monday, June 11, 2007

VILLARAIGOSA UPDATE: AEG "LA LIVE" PROJECT: The Mayor's Attempt To Save Los Angeles with Five Star International Convention Center
Aka: The "I Told You So Report" (Unless I Am Telling You.)

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