Zwartz Talk

What’s Next for L.A.’s Housing Fiasco? – Federalizing Municipal Debt

by Scott Zwartzfavela-1

Sunday, September 18, 2016

     Los Angeles’ housing has turned into a fiasco.  The cause is hubris.  The City is run by men with giant egos and small minds who fancy themselves above the laws of men and above the laws of nature.


      Are L.A.’s Movers and Shakers

     Above The Laws of Men?

       In this regard, they are correct.  Their hubris has actually changed our society from one governed by the rule of law to one run by the whim of corrupt politicians.  With the blessings of the District Attorney, the California Attorney General, and the US Attorney as well as the Los Angeles Superior Court, The Los Angeles City Council operates according to a vote trading pact which Penal Code 86 criminalized in 2006. September 9, 2016, Zwartz Talk, Vote Trading at LA City Council is Lynch Pint to Corruptionism, by Scott Zwartz

Is the Criminal Enterprise which We Call Los

    Angeles City Council Above the Laws of Nature?

      No!  The L.A. City Council is subject to the laws of nature including the laws of mathematics, geography, finances, psychology. However, the laws of nature often take a long time to operate and people are often unable to discern when the laws of nature are asserting themselves.

     Horrendous Traffic Congestion Reveals The Law of

      Mathematics Asserting Itself in our Daily Lives

Traffic Congestion is a function of over crowding.  The more cars which are attracted to a small area of land within a brief period of time, the more traffic congestion.  As the number of cars increases, the speed at which they travel slows, and eventually they slow to a crawl.  Not only does this waste fuel, but it wastes people’s time. and in a commercial society, time is money.


 The Wealthy Matter, While The Others Suffer

Our society is presently structured so that the individual worker and not the bosses have to bear the extra cost of traffic congestion. Suppose it were otherwise.  Suppose, the bosses had to bear the costs of traffic congestion.

It is possible to calculate the amount of time it takes for someone to drive from Woodland Hills to DTLA without any freeway or surface street congestion and compare that time with the time it takes to drive during rush hours.  Then, the employer would be required to compensate the employee for that extra travel time.

For example, if it takes an extra 30 minutes in the morning and an extra 30 minutes in the evening to travel between home and office, then the employer would owe the employee and extra 5 hours compensation per week.  For an employee making $15/hr, that would be an additional $3,750.00 per year.  After all, it was the employer’s decision to rent office space in Bunker Hill rather than Chatsworth.  If employers had to compensate employees for the extra commute time, we would see offices spread throughout the entire urban area.

In a society where a few wealthy people make all the decisions to benefit only themselves and make everyone else pay the consequences, the wealthy will not assume the burden of their decisions.  Instead, society is organized to make the owners of Bunker Hill, DTLA, Century City and the other concentrations of offices vastly wealthy while everyone else pays the extra costs.

Subways Make the Situation

      Worse for the Average Person

For over 100 years, Los Angeles has known for a fact that subways make transportation much worse for the average person.   One needs to understand the laws of mathematics, topography and finance as set forth in the 1915 Study of Street Traffic Condition in the City of Los Angeles in order to fully comprehend what a farce subways are for a gigantic circular metropolitan area1915_study_of_street_traffic_conditions_in_the_city_of_la

For purposes of this article, the relevant point is that subways are much slower than driving.  Thus, if employers had to compensate their employees portal to portal, employers would shun subways, trolleys, etc.   The first huge delay is walking to the subway station.  Since only about 5% of Los Angeles is within 1/2 mile of a subway station, the employers would be paying a hefty price for their employees to use subways.  Also, subways make many unnecessary stops and for each stop a subway makes, the employer would be paying.

If employers had to pay the costs associated with concentrating offices in the Basin, they would quickly decentralized.  Bunker Hill would become a ghost town.  If we had a situation where the employers paid the costs imposed by a corrupt city council which has conspired with real estate developers to keep office towers concentrated in the Basin, the DTLA business owners, who would be paying the extra costs of unnecessarily long commutes, would revolt by moving away from DTLA, etc.

The attorneys on the 7th floor of the US Bank Building know that they never talk to the attorneys on the 15th floor, and if they wanted to talk to them, they would use email.  There is no sane reason for people in the information business like stock traders, lawyers, accountants, consultants to be physically near each other.  The only person who benefits from crowding together all these thousands of people who have absolutely no need to every be physically close to each other is the land owner.  A 500 ft x 500 ft parcel of land is worth much more with 30 stories than with 2 stories.  The greed to make land in the Basin worth vastly more than land far away in the Valleys results in most of LA’s current troubles.

We see this corruptionism (called Garcettism in Los Angeles) whenever the City approves mega-structures without regard for the mathematics of transportation and population density.  CalTrans said, for example, that the additional traffic which the Millennium Tower would attract to Hollywood would further degrade the traffic with intersections which already were at a Level of Service [LOS] of F.  When The City ignored CalTrans, Judge Chalfant rejected the Millennium Towers Project due to the fact that its added population would make both the surface streets and the Hollywood Freeway non-functional.   2015-4-30 Chalfant Decision re Millennium

The City Council unanimously approved The Millennium Towers bringing gridlock to the 101 Freeway because   employees would bear the burden of an additional 30 to 45 minutes added to their already long morning and evening commutes.

No sooner did Judge Chalfant reject the Millennium Towers, than the City used the exact same bogus transportation data for The Palladium Project and for the Crossroads Project.  We now see Greed tripping over Greed.  The myopic avarice of Garcetti’s Manhattanization of Hollywood is a direct threat to Bunker Hill and we have the proposed monstrosity at 8150 Sunset where Laurel Canyon empties into West Hollywood promising to make this end of the City unbearable.   That is one reason the City of West Hollywood is strenuously objecting and has filed an appeal.8150 #1

Fools, knaves and crooks pretend that subways, trains and trolleys along with bicycles will solve all the transportation problems.  The NYC subway system, which is completely dependent on the fact that Manhattan is  2.5 mi x 11 mi island, operates at a $8 Billion annual deficit. That $8 Billion is in addition to the cost to construct the system; that $8 Billion is only for operation and maintenance.

If the City does not do routine maintenance, then the trains cannot run, and if one does not pay the union employees, the trains will not run.  Thus, the idea that Los Angeles could afford a subway system with its multi-billion annual deficit is ludicrous.  [Also, people who take the time to understand the 1915 Traffic Study will understand why a subway system is mathematically impossible in the Los Angeles area.]

So What Will  People Do?

Unlike the former Soviet Union where one’s residency was subject to the government’s mandate, Americans may freely move about the nation.  That’s why millions of people  could come to California.

Before 1993 when the corrupt Community Redevelopment Agency [CRA] came to Hollywood, Los Angeles was seen as a Destination City.  It rated near the top of desirable places.  People were still enamored with the golden days which they saw in the movies and they thought that there would always be opportunity in LA.

When faced with present day reality, however, Family Millennials are choosing to leave Los Angeles.  We have become an Exodus City.  The professional workers see no reason to stay in a dying town where they have to pay an extra $11,000.00 to $32,000.00 per year per child for private school.  The LAUSD is one of the worst in the industrialized world, unless a family is fortunate enough to live in Woodland Hills and Chatsworth.  On top of these horrendous costs is that fact that homes in Los Angeles cost about triple than in places like Austin, Texas.  The City is following an insane policy of tripling down on the density in the Basin which will make all the access routes from the San Fernando Valley into the Basin non-functional.

It plans to gridlock the 5 Freeway with Manhattanization along the LA River.  We all know the plans to the 101 Freeway into Hollywood, The fate of Laurel Canyon is all but sealed, while the 405 Freeway is world famous for its horrendous traffic.   That leaves only Benedict Canyon through Beverly Hills without massively obstructive projects just south of the Hills.

Los Angeles’ Competition is Outside California

Los Angeles’ competition is no longer Riverside or San Bernardino, but has become Nashville, Florida, Colorado and Texas.  While Garetti is cannibalizing LA’s great neighborhoods which attracted tens of thousands to LA for decades, other parts of the nation are catering to the desires of Family Millennials to have detached homes with yards in local communities where the citizens control the government and zoning.  With the widening of the Panama Canal, far more shipping will reach the Gulf ports making that part of the country more attractive to business.

LA has failed miserably at attracting high tech.  Since Garcetti has become mayor, the city’s own websites have become a joke.  In his endeavor to cover-up the massive corruptionism in the real estate industry, Garcetti had made it far harder for people to obtain any meaning information from the City’s website sites.  The City intentionally conceals vital information from the citizens and the judges readily support this subversion of the people’s elementary right to have a level playing field. September 8, 2016, CityWatch, Vote Trading, Secrecy and LA’s Culture of Criminality, by Richard Lee Abrams

What is in Store for LA’s Future?

All the fancy dudes in their high offices think that they have hit upon a most wonderful solution.  They will borrow the City into bankruptcy.  Here’s the plan which has been endorsed from the White House on down.  Los Angeles will sell billions of dollars in bonds and will borrow billions of dollars and give the money to real estate developers for high rises and for horribly expensive mass transit projects like a subway tunnel under the 405’s Sepulveda Pass.

They believe that this infusion of construction money will save Los Angeles from financial disaster. There is no doubt that  massive spending will temporarily pump up the local economy, but it is plan only men of gigantic hubris would endorse.

1)   The Flight of the Family Millennials Will Continue

The massive densification will hasten the flight of the Family Millennials since they do not want a more dense city; they want a more livable city.  Hence, even places in the snow belt like Colorado have become more desirable.  Professionals are not attracted to construction jobs digging subway  tunnels. Farmers Branch TX #1 They prefer to build a family life in outside Dallas in a  suburb like Farmers Branch. A nice home backing up to a golf course with room for the family dog and fruit trees is far more desirable than a 600 square foot apartment in the W Hotel condos.

2)  Employers Will Continue to Leave

Major employers generally can see a little farther ahead than the average person, and most already understand the impact of a city’s going far deeper into debt than it can ever repay.  They know that when the City gives money to a developer’s LLC or LLP, the company will go BK and never repay the loan, leaving the taxpayers to foot the bill.  That portends an infrastructure, which will be much worse in five years and which will become significantly worse as the Feds will force the City to pay off its debts to Wall Street first.

As people can foresee now, the entire scam of borrowing billions of dollars in order to stimulate the economy is based upon the City’s threatening bankruptcy unless the federal government bails it out. In other words, the City believes that it can Federalize Local Debt.

The Federalization of Local Debt

What if the Feds in 2020 or 2025 do not want to bail out Los Angeles?  The Feds will realize that the bailout will turn into an eternal subsidy.  The public is likely to realize that the real beneficiary of the multi-billion bailout is Wall Street.   Garcetti wants the City itself to borrow billions of dollars in order to keep his mega-development projects going because Wall Street no longer wants to be directly on the hook for these absurd projects.

Why do you suppose Councilmember Huizar wanted the City to finance The Grand Avenue Project?  Wall Street can read Judge Chalfant’s April 30, 2015 Decision in the Millennium case.  The Wall Street executives know that the Hollywood development mania threatens DTLA by causing gridlock on the Hollywood Freeway, and they also know that there is a glut of high end apartments throughout Hollywood and West LA as well as downtown.

Wall Street was previously duped into making foolish loans on the belief that the City’s giving the developers all the sale taxes from their mixed-use projects would create a revenue stream for repaying the loans.  Now that Wall Street sees that the retail space in these mixed-use projects runs between 80% and 100% vacant, they see that sales taxes will not provide the developers the revenue to repay the loans.  Thus, the Wall Street wants the City directly on the hook.  The City can sell bonds, give the money to developers who will then go BK, and the LA taxpayer will be liable to repay Wall Street.

What Will Happen if the Feds Bailout Los Angeles

If Federalizing Local Debt should “work” in Los Angeles, every other major City will follow suit.  The likely way to stop other cities from following LA’s lead will be to impose draconian restrictions on Los Angeles.  After another 10 to 15 years of deteriorating infrastructure, it is likely the Feds will nonetheless prioritize the repaying of the Federal Bailout, leaving no funds to repair LA’s devastated infrastructure.

By the time people realize than bankruptcy looms and people clamor for the Feds to bail our Los Angeles,  we will have chased out the Family Millennials.  The productive middle class has to be replaced and we already know that Family Millennials prefer single family homes in small towns near good jobs.  Other people with desires for a brighter future will also want to escape the crime ridden city with its diminutive police department and its down sided paramedic force. Assuming people actually come to LA to stay in the hotels, the hotel taxes and sales from their retail shops will go to the developers and not to the City.  While the mayor exclaims how great tourism has become, he neglects to mention that Los Angeles has lost more employers than any other city. A city dependent on tourism is not a productive society. Rather it is a place which has to live on the kindness of strangers.

This Disaster Scenario Has Happened Previously

Los Angeles is not the first place to have improvidently constructed high rise disasters.  In Glasgow, the city began with decent intentions, which is more than one can say for the current crimogenic LA City Council.  When these high rise prisons become undesirable, then the quality of the tenants deteriorates and they turn into slums like Plean St High Rise in Glasgow, like Pruit-Igoe in St. Louis and  like Cabrini-Green in Chicago.

The last months of the Plean St High Rise Flats in Glasgow in 2010.

The last months of the Plean St High Rise Flats in Glasgow in 2010.

The following description of Glasgow is concise and is a likely scenario of the projects which Garcetti wants to construct in Hollywood and for the Palmer Projects already built in DTLA. 2011 From Heaven to Hell, Plean St. Flats,

 The Unsustainable Financial Burden

      of  Additional Fixed-Rail Projects

If we should construct a larger fixed-rail system, we will lack the funds to operate and maintain the system.  On the other hand, we will not be able not to pay to operate and maintain the system.  The same story which Glasgow had with Plean St Flats and St. Louis had with Pruit-Igoe will play out with the subways.

The deterioration will make it financially impossible to keep the facilities functional.  As revenues fall, costs increase.  If it can happen in Washington D.C. with its far smaller and less expensive subway, it will happen in Los Angeles. May 6, 2016, Washington Post, Metro Will Shut Down Sections of Lines for Year-long Subway Repair Work, by Paul Duggan, Lori Aratani and Robert McCartney

Will People Move Back to Los Angeles?

Will people in 2060 and 2070 consider moving back to LA because land has become so cheap?  It’s impossible to know.  Was there anyone 45 years ago with enough foresight to predict Los Angeles in 2010 or 2015? Yes, there were a few people/

Actually, one hundred years ago, LA’s own civil engineers predicted the current state of affairs.  They warned not to try to restrict the flow of business, retail, and industry as the residents expanded outward.  They said that trying to restrict offices etc. to a few areas along transit corridors would make a few landowners very wealth while everyone else would suffer.

Rather than admit the situation which the demographics are showing, i.e. that density straggles a city, they are covering their crimes by launching the first step to Federalize Local Debt.



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