City Hall's Welfare For The Rich: A Case Study
Let's say you own 30 acres of land downtown. How big is that? It's roughly equivalent to 217 residential lots. (Thirty acres is about 1.3 million square feet, which would cover about 217 lots measuring 6000 square feet each.)Next, let's say I come to you, in my capacity as a real estate broker, with a proposed deal. My client wants to buy your land on the following terms. You deed the 217 lots to my client, plus you hand him another $52 million cash, and he signs a loan to repay you $58 million at below-interest rates.
Did you get that? He gets your land and $52 million of your money. You receive your money back, at some point, with a little interest, plus an additional $6 million for your 217 lots.
Do you know what that works out to as the price for each of the residential-sized lots downtown? Just $27,649! (Six million divided by 217 = $27,649.) A person could spend more to buy a car in this town -- a domestic car, even!
Now, if I came to you with that deal in the real world, how many seconds would it take you to call Security and have me thrown out of your office? Not many.
But, as reported deep within an L.A. Times story Sunday, that is the deal that a billionaire developer got from L.A.'s City Hall for the land underlying the Staples Center. According to the story, "Anschutz took control of 30 nearby acres," and "paid more than $18 million for the land," but he "obtained $58 million from city bonds — to be repaid with interest — and $12 million in redevelopment grants."
So if you do the math, he puts in $18 million, but immediately gets back $12 million plus $58 million, so he's netting $52 million right off the bat, and then promises to repay the $58 million. So his net payment to City Hall is just $6 million, plus some below-market interest. A sweet deal for 30 acres of downtown land, don't you think?
And remember: that land, my friend, DID, in fact, belong to you. It belonged to you, to me, and to the rest of us taxpaying citizens. But your friends at City Hall sold it for the equivalent of around $27,649 for every 6000 square feet.
It gets worse. He came back for more: now he's building a hotel across the street, and "last year . . . the Los Angeles City Council approved up to $290 million in rebates of hotel taxes during the next 25 years." In other words, they just handed him another $290 million of your money. Your trash tax isn't going to pay for police; it's going to pick up the tab for this guy's hotel.
Do you still think that "affordable housing" and the other developer subsidy programs are supposed to help the poor?
Posted by Walter Moore @ 7/23/2006 08:39:00 AM
21 Comments:
At least be honest and list the offset proposed benefits to the city.
All the jobs to be created, plus the convention business that is so sorely needed to create even more jobs and taxes to support other things.
Our convention center loses a ton of money every year, over $30 million.
With enough hotel rooms, conventions will start booking here, but it takes about 7 or 8 years to make this work, since most major conventions are booked about that long in advance. Thus, the subsidy to keep the hotel profitable until then.
I'm not saying that it isn't still a great deal for the developer, but there are some benefits to us, the taxpayers, and it is fair to spell them out. Our city council is lame, but not that lame.
We are the only major city in the world with no conventions, and this is the fix.
The benefits to the city?
Are you kidding?!
Jobs can be created by letting people spend their own money. It's not necessary to take it from them in the form of taxes and hand it to billionaires.
Also, the idea that this will be a "sure thing" if we just pump more millions into it is optimistic, at best. Why do you think private enterprise opts not to build convention centers?
Finally, why do we need a "fix" for your assertion that "We are the only major city in the world with no conventions"? There is no public interest in conventions, per say.
Rather, there is a public interest in, say, safety, and in creating a tax and regulatory environment that encourages private business to invest in the city -- rather than having the city invest in private business.
I just got an e-mail saying KTTV at 10p last night did a story on the top 5 corrupt policitans and Martin Ludlow was listed as #5. Can anyone get the web site to look at this? I tried on fox and can't find.
While the mental midgets on city council are making Anschutz richer, the Times illustrates how the middle class is shrinking in LA. Memo to council airheads, bond measures and trash fee hikes just make it worse for us non-billionaires.
The Times also had an article on the "danger" of a "brain drain" from government unless term limits are repealed. Insofar as these are the same brains who brought us record deficits, welfare for billionaires, etc., then I say pull the plug and let them ALL drain out!
You are very optimistic Phil.
We should NOT have to give sweet deals to developers here. If one developer leaves, there will be one to replace him very very quickly.
What will happen to those $300-400 a night rooms when there are no conventions going on? You think the economically over-burdened LA resident is going to just go down and spend the night NEAR THE STUPID STAPLES CENTER??
Our council is that lame and so is your lame reasoning that there are some (miniscule) benefits to us taxpayers.
You can always get your answers by going to the Ethis website and seeing how much money Anschutz and others involved have given to the mayor and the councilmembers.
Daily News lays out all the money the city council clowns have at their disposal. You would think with all the issues in every single district what the hell are they doing with all that money? Ed Reyes stated at last week's meeting he had 22 staff members plus interns. His ass doesn't do anything and mind you there are a lot of very young Latina women working for him. Heard he got rid of the men. I say get rid of these council members and get new blood and leaders in.
Does anyone actually need a news story to confirm that Martin Ludlow is corrupt? This guy admitted to two felonies, plus some misdemeanors, and agreed to pay something like $187,000 in fines. Or, rather, it appears that he is now getting his friends at City Hall to help him pay those fines!???
The City Ethics website lists that Philip and Nancy Anschutz each gave $1,000 to Soboroff, and the
Anschutz Corp. $500 to John Ferraro (CD-4).
In terms of lobbying, Anschutz Entertainment Group (at least in 2003) is represented by Sage Advisors Inc., who received $36,000 from AEG in 2003. (Note, Sage Advisors, who has other clients, has contributed a total of $11,000 to various city council and mayoral candidates, mostly in $500 amounts.)
According to the Cal-Access Secretary of State website, Anschutz and his corporate entities have given $211,000 to various state candidates, including $100,000 to Bill Simon for Governor, and $25,000 to Schwarzenegger's Calif. Recovery Team.
Opensecrets.org lists the many federal campaign contributions Anschutz has made throughout the country.
To 7:15 -- Good work! Wow!
The amount of money contributed indirectly can be even greater. For example, sometimes big companies tell their vendors (e.g., law firms, bankers, etc.) that they REALLY support Candidate X and they would REALLY appreciate the vendors making a contribution to same.
The vendors, and their employees and family members, then all make contributions, so they can report back to their very important customer how fully they supported Candidate X. But unless you can diagram all the connections, you never find, from the websites, how vast the financial impact of a "heavy hitter" is.
Philip Anschutz is sort of like the Wizard of Oz. He is the man behind the curtain pulling the levers. Nobody sees, yet he has a huge impact on Los Angeles.
Tony political operative is sent by Parke Skelton to disrupt a Hahn press conference, and you ask for an apology? How stupid can you get?
But let's see who else wants an apology, this time from Tony:
-That girl from Sacred Heart that Tony got pregnant, she wants an apology for ruining her life and setting her family on the run to Fresno - you know one day that kid, must be about 33 now, will come looking for you.
-Maria Elena Durazo for not marrying her and passing her off to Miguel Contreras.
-June from the Venice Room, she still has that scar you gave her.
-Father John Morretta of Resurrection Parish, for flat out lying to him, maybe you can go to him for confession, you are, after all, a reformed Catholic!
-The Mothers of East L.A. for lying about them and destroying their scholarship program, have you given any schoalrships away?
-The residents of the 14th District not for lying to them but for your insistance that they released you from your promise.
-Your daughter Priscilla, for leaving that bruise that prompted a child abuse case to be filed against you.
-That guy from La Fonda, I'm sure he still has a scar from when you stabbed him.
-Your wife for, well, just being you.
-Martha Reyna for, well, just being you.
-Your son, Tonito, for all the times that you abandoned him at those South Pasadena baseball fields, how many times did he have to walk over to Jesus Quinonez' house waiting for you to pick him up while you were out there being a man!
-Bob Hertzberg, for either making a pass at him or setting him up with one of your sluts, and you wonder why Cynthia doesn't want him to endorse you.
-El Sereno residents for reviving the dead Long Beach Fwy extension and supporting the connector road.
-Parke Skelton and Steve Barkan, for not being honest with them and telling them about all those skeletons in your closet, you know more are coming - timing, timing, timing.
This list goes on and on.....
Excuses for what looks like a totally absurd real estate deal:
(1) The City of L.A is not a business. It is not here to make money. A City is supposed to try and take care of the long term economic health of millions of its citizens. Somehow (?) this fits into that category.
(2) The guy getting the money and the land is really quite good at what he does, and the city if buying his mad skillz to build a major piece of this town's future.
LAT October 6, 2003:
Donors Have Stake in Governor's Decisions; Philip Anschutz is among those who have benefited. Davis denies there is any link
Despite opposition from the state Department of Consumer Affairs, [Gray] Davis signed legislation sponsored by Denver billionaire Philip Anschutz, who heads a telecommunications, real estate and entertainment group that has a major ownership interest in Los Angeles' Staples Center.
Anschutz and the various entities he controls donated $95,000 to Davis in his first term and in July gave $50,000 to one of the governor's political committees.
Anschutz representatives declined to discuss the issue, but a spokesman for Davis said there was no link between his actions as governor, particularly the signing of the legislation, and political donations he might receive from various interests.
Of course the City of LA is a business, you fools.
It has to make enough money to spend to keep up its strests and pay its cops and fireman and everyone else on the public dole.
And where does it get its money??
From TAXES. You know, sales taxes, business taxes, HOTEL taxes (sometimes called "bed" taxes), parking tsxes and the like.
It needed to cut its losses in the convention center and up its hotel taxes.
That's what is going on for you numbskulls who don't get it like Walter and Ubray 02.
If Soboroff loves Anshutz, that is reason for me to not like him.
Whenever the City owns "surplus" property -- which should happen approximately never -- it should sell it to the highest bidder to benefit us, the taxpayers, and to ensure the property is put to its highest and best use. The City should NOT give the property away or sell it at below-market rates. That is what you call a breach of fiduciary duty or, in technical terms, "a rip-off."
Walter Moore says "Jobs can be created by letting people spend their own money". Really? Give us some examples please. I spend my money flying several times a year, yet airlines are laying people off. I spend money via my bank loan yet my bank just closed several branches & laid off several dozen people.
Moore shows us - again - that his mind is so tiny it cannot comprehend anything but the most basic equations. Consumer spending = jobs. Gee, you must have been the asshole George Bush consulted about that mammoth tax refund scheme couple years ago. You know, the one that created no jobs except the minimum wage ones that leave everyone you don't know in poverty? But then, you probably think we have a strong economy because people don't just have ONE job, they have TWO jobs - one to pay for a roof over their head and another to pay for food.
So 11:23, you are saying that the City of Los Angeles needed to cut it's losses from the convention center (that Anshutz is responsible for putting there) by offering Anshutz a good deal to put up some more buildings around the one where they're cutting their losses. What happens when the City of L.A. needs to cut it's losses that will/could occur with the hotels? Why couldn't that be a complete loser?
Would Anshutz be losing anything then? Or just the City?
All of this for some bed taxes? I'm not an expert in economics, but it seems awfully confusing and shady to me. I'm not getting the "good deal" part.
Walter-
THAT would depend on who the developer was and who got to choose the plan (hopefully the community), otherwise we get ripped off anyway. Again - Tutor Saliba and all of their fuck ups is a great example. Why do we have to take the lowest bid in the city? Who decides this is good policy? There probably is no known case of a major project NOT going over budget with those "lowest bid contractors".
You are wrong about never giving land away or selling it at below market costs. Land is probably one of the best mitigations in the City. It's because of you we have to have Props that force us to have a certain amount of open space or else you would have no pocket parks in the city because they aren't profitable for you and your friends. Or Anshutz. Why do we have to care about him? We care about every known piece of land here being covered in cement for the sake of profit. We need pocket parks to exist. We need them more than strip malls and out-of-code developments being thrown up quickly.
It's your duty as a citizen of the community you own property in, to make an effort to attend every meeting and stay informed on any and all building/developing in your community. Nimby? Hopefully. How else would we preserve what little we have left here?
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