By most accounts, secessionists are praising the near-400-page report released last week that says the Valley, with its 1.4 million residents, could become a viable city in its own right. The study prepared by the Local Agency Formation Commission (LAFCO) also supports their claim that the Valley has long been treated like Los Angeles’ unwanted stepchild, forcing it to pay more for services than it actually uses. But already, there are indications that secessionists could face hurdles coming to an agreement on some of the meat and potatoes of the report that deal specifically with revenues and how services would be shared. And that’s vital. The applicants for secession have just 45 days to huddle with their consultants and draft a final divorce plan for LAFCO, which would later be used by to determine whether the issue should be put to the voters in 2002. For example, the report shows that the Valley will generate $1.04 billion for the city in fiscal year 2000-2001, but Los Angeles’ expenditures for services back to the Valley amount to only $976.5 million, leaving a gap of roughly $68 million. On its face, it looks like the Valley ought to get that money back, right? Wrong. The study asserts that, should the Valley become its own city, Los Angeles would lose that $68 million it now uses to pay for programs in other parts of Los Angeles. And, as required by state law, the Valley would have to pay Los Angeles that $68 million each year for a so-far undetermined amount of time in “alimony’ to make up for its loss, to keep the arrangement “revenue neutral.” That’s a drop in the bucket and a fair price to pay for freedom, says Richard Brain, president of Valley Vote, the organization that originally requested the study. “Number one, we are paying that money currently,” said Brain. “So, the logic behind that is that there are needs on the other side of the hill that our taxes pay for and, if we want independence and local control, it cannot jeopardize the city. Out of $1.1 billion, you are talking about $68 million, and the $978 million left over would stay here in the Valley and we would control how that was spent.” Not exactly, said William Powers, a Chatsworth attorney and member of Valley Vote’s executive board, who asked to comment only as a private citizen. He said the study presents only a snapshot of revenue and expenditures at a given point in time, and does not take into account the disparate allotment of services. “What the consultant did in my opinion was take a very superficial approach,” said Powers. “(The study) says that the Valley should, number one, continue to be short-changed and, number two, because it has, the embezzler has taken from the till over time and gotten used to a certain lifestyle, so the Valley must continue to subsidize that lifestyle.” The LAFCO study assumes the Valley would contract with Los Angeles for vital services involving infrastructure said to be too complicated to divide, such as the delivery of water and power, information management and 9-1-1 emergency communication services. Brain said his organization has no problem with that because, with the separation, the Valley would no longer be held hostage by Los Angeles and what it thinks the Valley’s needs for those services ought to be. “We have never been opposed to contracting for services,” said Brain. “We would have a Valley city council that would contract with the city of L.A., but we would determine the level of services we want from them.” “And, maybe we would decide we would spend more money to keep our parks safer, or put more police on the streets,” said Brain. “So with that $976 million we would adjust our priorities and, secondly, we could create a more vibrant business environment so that we bring more quality jobs back into the Valley and increase our tax base and thus raise more revenue.” But according to Powers, secession applicants should be looking for ways to recoup what the Valley has contributed for those services over the last century, instead of cutting their losses in the name of independence. “The Valley has been paying into those infrastructures on a citywide basis for 100 years,” he said. “The idea of the DWP charging us and (considering the Valley) just a customer, is unfair. “We don’t have an equity interest in the DWP? I think Los Angeles owes the Valley.” There is another concern linked to the idea of contracting services to the Valley. According to Brain, it is still not clear whether LAFCO has the authority to approve or reject such contracts, either before or after incorporation. That opens up the possibility of serious discord among negotiators and could lead to lawsuits. “If the (city) government (decides to) keep 1.4 million residents from receiving the services it has paid for already, than that’s a shocking set of circumstances,” Brain said. “But let’s assume some (L.A. City) Council members, because of their ego or pride, want to prevent the Valley from having power. How quickly do you think the DWP would lose customers?” Brain said if it had to, the Valley could push for a breakup of the DWP as well because, under state law, LAFCO is permitted to divide municipal assets. Brain also said a 1998 LAFCO report showed that, as another option, the Valley could use alternative utility providers and, if it did, the DWP “would probably go bankrupt.” Richard Close, chairman of Valley Vote, said technically both Brain’s and Power’s views are correct. For example, he pointed out to the commission, as the report was delivered, that the study shows the Valley now has only roughly 2,000 police officers and personnel at its disposal out of 13,645 budgeted positions for FY 2000-01. He said that translates into roughly 700 police personnel on duty at any one time in the Valley. “This clearly shows that we aren’t getting our fair share of services,” Close said during a press conference after the LAFCO meeting. But back to the issue of contracting for services, Close cautioned that political views would have to take a back seat to the law. “In the final analysis, (because he is an attorney) William Powers knows the law is the law and Valley Vote is going to comply with whatever LAFCO determines is necessary.” Close, also an alternate LAFCO board member, said criticism of the study from those on both sides of the debate is a foregone conclusion. But he cautioned that the study’s findings prove that the push for secession has made it through the legal hurdles and is likely to make it to the ballot and pass muster with the voters. “This process could have been all over,” said Close. “LAFCO’s consultants could have said (a breakup) doesn’t meet statutory requirements and that would have been it.” Once a final proposal for secession is submitted, LAFCO will determine if the plan is viable enough to put to the voters. But Close said there is little doubt the commission will accept the proposal because its own study has already shown secession would be fiscally viable. “LAFCO does not have the discretion to keep it off the ballot if it meets the statutory requirements. And what we saw yesterday and with the report is that it does,” Close said. In order for a secession measure to pass it must receive a majority of votes both in the Valley proper and in the entire city of Los Angeles. But because the Valley represents roughly 49 percent of the votes cast, and voters in other parts of Los Angeles stand to inherit a smaller local government as a result of a Valley breakup, it isn’t likely to face much opposition, Close said. There are costs involved in a breakup. In the Valley’s case, the study is projecting those to be at least $7.7 million and as high as $13 million. Supporters say that money would be quickly recouped through projected surpluses over time. Financially, the study shows that even with a $68 million annual payment to Los Angeles, the Valley would have an available cash balance of $20 million by 2005. The findings of the study, said Brain, “sure make the people that have been saying this wasn’t viable and we’d be deep in debt look pretty silly. We got a worst-case scenario and we still come out with a surplus.”
