Construction on the Wilshire Grand in Downtown LA.

Last week City Controller Ron Galperin published an audit detailing the City’s record on collecting and spending development impact fees. As I read the press release, it’s hard to say whether I was more shocked or angry. The upshot is that the City of LA is failing to collect tens of millions of dollars in fees from developers, and it’s not even spending the money that has been collected. Here’s the lead from the press release.

City Controller Ron Galperin issued an audit that found the City of Los Angeles is failing to exercise its power to charge citywide development impact fees, which State law says can be collected from developers to mitigate their projects’ impacts on neighborhoods and defray the costs of public facilities and infrastructure, such as roads, bridges, libraries, parks and police stations.

I have to ask, What the hell is wrong with out elected officials?! Are they so inept they don’t realize that we can and should collect this money? Or have they gotten so much campaign cash from developers that they feel compelled to let them off the hook when it comes to charging legitimate fees? Either way, these revelations are shocking. This City’s infrastructure is crumbling, we’re seeing an avalanche of new development which is putting an even greater strain on roads, water and public services, and the people at City Hall aren’t even asking for money that we need to address these problems.

The whole thing is just mind-boggling. Here’s another paragraph from the press release.

In preparing their report, auditors in Galperin’s office compared Los Angeles with other western cities. In FY 2013-14, San Francisco had $3.6 billion in permitted construction and collected $96 million in impact fees. Portland had $1.5 billion in permitted construction and collected $31 million. Meanwhile, Los Angeles had $5.3 billion in permitted construction but collected less than $5 million in impact fees. Based on these numbers, auditors said Los Angeles had the potential to collect tens of millions of dollars more in fees.

So even though the value of permitted projects in LA was greater than San Francisco and Portland put together, our local government collected less than 5% of the total fees received by those two cities. Again, I’m shaking my head in disbelief.

Recently Mayor Garcetti made a show of announcing a program to collect linkage fees from developers to fund affordable housing. But in 2011 the City hired a consultant to produce a report which showed that LA could be collecting between $37 million and $112 million annually. Why have our elected officials taken so long to act? It’s going to take at least another year for the City Council to enact this program, and during that time we’ll lose out on many more millions.

Here’s a quote from the letter that Galperin sent to the Mayor with the audit.

The City of Los Angeles’ approach to collecting and spending impact fees to date has been haphazard and most often neighborhood-specific rather than Citywide, as is customary in some other localities, and sometimes, not sensible. No central entity has been responsible for monitoring the fees. And key officials from various City departments told auditors they did not know what other departments were charging.

This City has so many pressing needs, and we’re constantly told by our elected officials that we don’t have the money to address those needs. But according to Galperin’s office, we’ve had the ability to access a major revenue stream that City Hall has almost completely ignored. It’s insane.

If you want to look at the audit, here’s the link.

Audit of Development Impact Fees

And after reading the audit, you might want to call your City Council rep and ask why we didn’t start collecting these fees years ago.