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Sweetheart Deals and Opportunists: How to Destroy a City

EDITOR’S NOTE: The City Council’s first action Tuesday was to put off for at least a week the two items approving the CRA deal with Pacifica Ventures.

With the complicity of our elected, appointed and hired officials, the jackals are feasting on the carcass of Los Angeles as if there were no tomorrow.

At the rate they are going, there will be no tomorrow.

This is a city littered with foreclosed houses and empty storefronts that is slashing core services like libraries and parks and yet they are finding hundreds of million of dollars for pet projects and giveaways in a desperate effort to buy jobs.

Last week, they declared a “tax holiday” for new businesses and soon they will offer tax breaks to old business with DWP rate cuts thrown in for good measure even as they take every last dollar out of the pockets of residents struggling to make ends meet.

Why would any business locate here or expand if the customers don’t have any money to spend?

They — the DWP and Community Redevelopment Agency — paid more than $11 million last month for five industrial properties near downtown for their fantasy of a “clean tech corridor.” But there are no firms that have shown any interest in locating there so they are offering $11,000 in prize money for innovative ideas of what could be done with it..

Today, the Council will roll over for developer Hal Katersky’s Pacifica Ventures and approve the CRA selling him a property at 1601 N. Vine St. in Hollywood for $825,000 — the same property Katersky he flipped to the CRA in 2006 for $5.45 million a month after he bought it.

Don’t expect your Council members to do the background research or ask the tough questions that community activists like Bob Blue are asking about this deal and making their research available to the Council before they vote on this sweetheart deal.

This is a deal that stinks like so many others that are going on now.

Katersky bought the Vine Street property from Ullman Investments for the same price the CRA paid him a month later, presumably because Ullman was the target of a 2000 audit by the City Controller for a highly questionable deal involving CRA acquisition of a parking lot in Hollywood for an inflated price.

As for Katersky, a subsidiary of Santa Monica-based Pacifica Ventures, Pacifica Mesa, filed documents in bankruptcy court in Albuquerque just two weeks ago showing it has $105 million in debt on a studio project that flopped in recent years, a filing that came just days before the property was to be sold at auction in a foreclosure sale.

The state-of-the-art studio was built with union pension fund money and strong backing from New Mexico Gov. Bill Richardson who offered huge tax breaks for any movies made there.

Bankruptcy notwithstanding, Katersky and partner Dana Arnold have found a friendly environment in LA for heavy subsidies to build a  $57-million, eight-story, glass office building on Vine between Hollywood and Sunset.

Under the CRA deal, the tenants for the building are supposed to be entertainment companies and is needed, the CRA says, because “we’re trying to revitalize Hollywood.”

Katersky’s own view is more sanguine: “Every project we do has government involvement or it doesn’t take place…We are opportunistic developers.”

Think about this:

Every dollar the CRA gives away comes from property taxes that could be used to keep libraries open and provide other services, could even be used to revitalize the city’s vast expanse of deteriorating neighborhoods, not just downtown and Hollywood.

Every dollar the DWP gives away could be used to replace rotting water mains or upgrading the aging power grid or even keep rates low so residents had money to spend in local stores.

It’s no accident that LA is broke and broken. It’s not an act of God or the fault of the recession.

The waste, the mismanagement has been going on a long time because of misguided policies that neglect the interests of the public. What’s shocking is that even as the bills are coming due, the city’s leadership is throwing away even more money, hastening the day of reckoning. 




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13 Responses to Sweetheart Deals and Opportunists: How to Destroy a City

  1. Anonymous says:

    “Every dollar the DWP gives away could be used to replace rotting water mains or upgrading the aging power grid or even keep rates low so residents had money to spend in local stores.”
    But but but when DWP was withholding that $73 million from the General Fund, you said it was a bad thing! Even though that money did not belong to the council in the first place and would just be used to cover up the fact the council can’t budget for shit.
    Oh wait I get it. Heads = DWP giving away money is good. Tails = DWP holding onto money is good. Tails won today

  2. Anonymous says:

    Here’s the winning entry on what to do with the White (Elephant) Green Corridor…
    Turn it into a food truck corridor. Give the people what they want…crispy, crunchy, melty, spicy.
    Or, you can use it to let the geometrically progressing homeless population camp out and sleep.
    Problem solved.

  3. Anonymous says:

    What has happened to the FREEDOM of the PRESS here in LA?

  4. Sandy Sand says:

    This all sounds so underhanded, sleazy, corrupt and illegal that it and all the deals like the one for Broad’s museum to himself should be stopped dead in their tracks by the city attorney or district attorney for “investigating.”

  5. Anonymous says:

    A thank you to Major Sam Blog for revealing the cost the constituents have to pay for the Lack of Leadership council member car.
    The LOST Angeles Lack of Leadership Council praises each other on how wonderful each other are during council meetings while the Need to Set Precedent Garcetti claims to be green. The Need to Set Precedent Garcetti should introduce a motion mandating all council members, including the mayor, to drive SMART cars effective immediately. This mandate needs to include city owned SMART cars display advertisements on cars paid by private companies that should cover the cost of these cars. Show Angelenos how green each council member really is.
    Smart cars
    http://www.blogto.com/upload/2007/06/20070618_wiicar.jpg
    Major Sam Blog “You too, can have the taxpayers pay $53,000 for your custom SUV, if elected to City Council.”

  6. Anonymous says:

    Major Sam Blog “You too, can have the taxpayers pay $53,000 for your custom SUV, if elected to City Council.”
    http://3.bp.blogspot.com/_FvYmf4tPA1A/TF8zw1oGndI/AAAAAAAACQ4/x1EutfJcTVg/s1600/El+Sereno+Sign+Dedication+038.jpg

  7. Bob says:

    This is a real simple issue even if you ignore the giving away of money through a loss sale – Cities and other government agencies shouldn’t do business with an entity that recently filed Chapter 11.

  8. Anonymous says:

    “Veni, vidi, vici¡” —JULIUS CAESAR

  9. Anonymous says:

    Why is the City cutting a deal with a shady character like Hal Katersky? If the City Council ever agrees to consummate this give-a-way they should all be thrown in jail:
    http://albuquerque.bizjournals.com/albuquerque/stories/2010/07/12/story2.html?b=1278907200^3620781

  10. Anonymous says:

    And has anyone noticed it’s always the sleaziest lobbyists and attorneys sucking on the same tit at City Hall? Who represents Katersky and Arnold? Oh yeah, Armbruster et al, and recent Latham & Watkins drop out — Bill Delvac.
    They bring in Bill when there is a historic building and the owner wants to get out the wrecking ball. In this case, it’s the funky little burger stand Molly’s — which has operated on Vine Street for nearly 80 years. But it does not fit in with the sanitized and upscale vision of Garcetti. So, they will try to get rid of it.
    Delvac, once a man who fought to preserve historic buildings, will be worming a way to destroy the sidewalk burger counter that Molly’s has that directly connects with the pulse of Vine Street and music people. Thanks Garcetti. Thanks CRA. Thanks Delvac.

  11. Anonymous says:

    That’s true – one of Bill Delvac’s specialties is too declare actual historic buildings and homes not relevant and not worth of historical status – all primed for the wrecking ball.
    Delvac used to work with respected historical preservationist Christy Johnson MacAvoy. But then he went to the dark side.
    His most recent example: http://articles.latimes.com/2010/jul/30/local/la-me-byershouse-20100730

  12. Anonymous says:

    It is true the City of Los Angeles is a more expensive place to do business. If the goal is to get small businesses to innovate and locate in LA, creating incentives such as the ones mentioned in the article do make LA a more business friendly place. Why would a populist like Kaye be against what are in essence tax breaks for the types of businesses that produce the greatest numbers of jobs?
    With regard to CRA, it would be helpful if Kaye and his cohorts actually dug a bit deeper and provided a more thorough investigation of projects like the Vine Street proposal. When rented, how many jobs would be located in the building, where would they come from, how much new tax revenue would be generated, etc.? Truly curious minds want to know the full picture and then debate the demerits as well as the merits. No doubt the City should delay a deal if the entities are corrupt or bankrupt or legally conflicted. However, the negative and conspiratorial tone of Kaye’s writing just leads to the further reification of the idiocracy that in the end stands for nothing, nowhere, no way, that he inadvertently represents.

  13. Definitely, one of the best article l have come across on this deserving subject. I quite go along with with your assumptions and will eagerly look forward to your forthcoming updates.

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