The City’s Shakedown Machine

Charles Crumpley
Editor and Publisher of the San Fernando Valley Business Journal

The unfolding corruption scandal involving Los Angeles City Hall denizens and real estate developers is absolutely shocking. On the other hand, it’s not at all surprising. It’s almost to be expected.

Huh?

I mean this: It’s shocking to read the details of the pay-for-play charges, including allegations of $1.5 million forked over to City Councilman Jose Huizar along with the use of hookers (apparently called “dessert”) and other purported payola supposedly in exchange for him greasing the path so downtown developers could squeeze their big building projects through the city’s Byzantine bureaucracy.

And of course, Huizar isn’t alone in prosecutors’ cross hairs. The Justice Department claims he oversaw a veritable criminal enterprise involving sundry real estate types and City Hall players, all at the feeding trough. The San Fernando Valley’s own Mitchell Englander, who abruptly and mysteriously resigned his City Council seat 1 ½ years ago, pleaded guilty earlier this month to a federal charge of obstructing an investigation into whether he accepted money and escort services from a what was described as “a businessman.”

Yeah, all that’s shocking. The broad scope. The depth. The brazenness. All of that.

But on the other hand, it’s not surprising. The reason: City Hall is set up to be a shakedown machine for real estate developers. Somehow, somewhere, some people would take it too far. It was bound to happen.

The existing old zoning codes along with other hurdles make it so restrictive that it’s nigh onto impossible for developers to build much of anything substantial in the city without getting a one-off variance or some kind of exception. And for that, developers have to trudge to City Hall, hat in hand, where they’re met by city officials with their hands out.

When I was a young reporter and even more naïve and idealistic than I am now, I asked a real estate developer why he and others in his industry were so involved in local politics. He patiently explained that a developer must be “involved.” The city sets up roadblocks to construction projects, and developers have to pay certain people to get them taken down. Usually the payment is a legal, or kind of legal, quid pro quo. The developer or the developer’s employees or family members contribute to a campaign or host a fund-raising dinner or some such, and the hurdle soon disappears. The developer told me that he didn’t know any of his fellows who felt good about the system, “but that’s the cost of doing business.”

I’ve seen much the same system in other cities. But it seems egregious in Los Angeles, where substantial projects are routinely approved through a one-off spot zoning process and where City Council members have openly said they vote for or against any construction project based on how the council member in that district votes. In other words, every City Council member has their own potentially profitable fiefdom, and a mutually protected one at that.

In that environment, it is not surprising if eventually some people lose their moral compass and take matters too far. The temptation is too great. The details of what they do may be shocking, but the fact they succumbed to the enticement of riches is almost expected. The fact that the system appears set up for shakedowns almost gives graft an institutional blessing.

David Ryu, the Los Angeles City Council member from the Valley, is on the proper track. He has proposed killing a provision in the city charter that allows council members to override the decisions of the city’s planning commission.

“It allows the City Council on the spot, on a whim, to change the decision (of the planning commission),” Ryu was reported as saying in May. “It is too much power pretty much in the hands of one individual and creates an environment rife for corruption.

“We’re almost mini-mayors or fiefdoms,” Ryu said. “So, in reality the city of L.A. is almost like 15 cities in one.”

Will the ongoing City Hall scandal prompt the City Council to truly break up its shakedown machine?

Let’s watch.

Comment on this article


Please note, statements and opinions expressed on the Fox&Hounds Blog are solely those of their respective authors and may not represent the views of Fox&Hounds Daily or its employees thereof. Fox&Hounds Daily is not responsible for the accuracy of any of the information supplied by the site's bloggers.