A handful of Skid Row residents and Occupy Los Angeles participants appeared before the Los Angeles City Council's Housing, Community and Economic Development Committee last week with an unusual request.
They asked council members Ed Reyes, Herb Wesson and Richard Alarcon (committee member Jan Perry was absent) for help in getting back $1 million in public funds that was supposed to target homelessness and poverty. Mayor Antonio Villaraigosa and the City Council had previously decided to use the $1 million to subsidize Gensler, a global architecture firm, in its move from Santa Monica to the Jewel Box building at City National Plaza downtown.
"We realize that this is not business as usual," pleaded Beth Mueller, a member of Central City Church of the Nazarene. But, she told the committee, "It is the business of directly addressing our most impoverished communities. ... We are watching carefully. We are shining a light on what is being done in the dark."
City leaders had garnered extensive bad press when they funneled the $1 million from the federal Community Development Block Grant program to help Gensler — especially after it became clear that Gensler's payback requirement would be meager: It must create as few as 29 low-income jobs in return for the huge, public gift.
L.A. Weekly broke the story in April about how the $1 million would be used for the Jewel Box on ritzy Bunker Hill. The Legal Aid Foundation then filed an administrative complaint with the U.S. Department of Housing and Urban Development, which administers Community Development Block Grant funds, on behalf of a Skid Row nonprofit called L.A. Can.
Legal Aid attorney Barbara Schultz says City Hall engaged in "job piracy" — using public funds to shift jobs from one city to another — which is barred by HUD rules.
But in classic government-think, the Obama administration rejected Legal Aid's complaint, saying its rule only bans job piracy between regions — it's fine for one city to snatch jobs or companies from a city in the same labor market, like Santa Monica and Los Angeles.
Just last year, Villaraigosa had stressed to the City Council that increasingly scarce block grant funds from HUD should be spent addressing "the immediate needs of our most impoverished communities."
But that's not Gensler, with 2,800 employees worldwide and $463 million in revenue in 2010, according to its annual report.
Earlier this year, Gensler was designated by developer AEG as the architect for Farmers Field, the $1 billion NFL stadium to be built downtown.
Besides approving the Gensler subsidy, the city is lightening Gensler's financial burden by hundreds of thousands of dollars by offering it a three-year tax holiday, given to all new firms arriving in L.A..
Over the past year, Mueller and other members of her church had tried to get the city to pay attention to how residents of Skid Row thought the block grant money from Washington should be spent — such as to help Skid Row residents start a car wash, create rooftop gardens, offer parenting classes, plant trees and decontaminate former industrial sites in Skid Row.
But the city rejected every proposal.
Out of $2.2 million in block grant funds designated for Jan Perry's council district, which includes both Skid Row and City National Plaza, nearly half is going to helping Gensler relocate less than 15 miles from Santa Monica to downtown.
Occupy Los Angeles got involved after Mueller went to the group, camped out on City Hall's lawn. At its Oct. 17 general assembly, Occupy L.A. endorsed the Skid Row bid to get the $1 million back.
One of the downtown activists said she'd heard about the Gensler subsidy at Occupy L.A.'s general assembly, the big meeting held each evening on City Hall steps, and found it shocking.
"When we heard it announced, our mouths just dropped open," recalls Martha Ciattei, a 57-year-old nurse from Long Beach. "We said, 'Did we just hear what we thought we heard?' "
Clinton Carter, a Skid Row resident, told the City Council's Housing, Community and Economic Development Committee members: "The architects that you're giving this money to already have money. You should take the money back and use it to get people off Skid Row."
Skid Row and Occupy L.A. aren't the only ones riled up. The mayor of Santa Monica, Richard Bloom, says that L.A. City Hall's job-attraction strategy takes money from programs that rely on hard-to-get public funding, yet the strategy adds little to the region's economy.
The actions of Perry, Villaraigosa and the rest of the City Council could hurt all local governments, Bloom says.
"This is an emerging issue," Bloom notes. "If Los Angeles is going to engage in predatory practices to attract businesses from nearby cities, then other local governments are going to have to respond. I would hate to see a cycle where, if Los Angeles is going to offer a tax holiday, then other cities have to as well. That does nothing but drain public revenues. When you start to hurt your neighbors, that's a particularly bad outcome."
Gensler and Thomas Properties, the landlord that owns the Jewel Box, did not respond to requests seeking comment, nor did Perry. Villaraigosa has argued that the subsidy is an example of L.A.'s savvy, business-friendly approach.
But how did Gensler qualify when the poor on Skid Row are repeatedly rejected? Legal Aid dug up a slew of emails showing that Thomas Properties, a big landlord that owns Southern California skyscrapers, sought taxpayer help from Councilwoman Perry to defray the cost of wooing Gensler downtown and away from Santa Monica.
The embarrassing emails, first published by KCBS-TV reporter David Goldstein on Sept. 26, show that the deal wasn't initiated to serve "the immediate needs of the city's most impoverished citizens" at all, as Villaraigosa urged last year.
In his first email on Nov. 17, 2010, Thomas Properties executive Ayahlushim Getachew merely asked one of Perry's 20-plus personal aides: "Do you have any available block grant available [sic] at [Community Development Department] for a really great opportunity in the 9th [Council District]? What do you think?"
The next day, after Perry's aide asked Getachew for details of the "great opportunity," he spelled it out: "Confidentially," Getachew wrote, "Gensler just agreed to move their corporate headquarters to our building" — the Jewel Box. "We are quickly and quietly working to make this a good move for everyone."
Getachew said, "I need about $1 million or more for tenant improvements and about $600,000 from DOT or Metro for transportation incentives ... transit passes, etc. ... Do you think that is doable? Can we work together on this?"
In May, the feds cut block grant funds for the poor by more than 16 percent. But a city development official, Ninoos Benjamin, emailed Getachew with upbeat reassurance that the Gensler subsidy would sail through.
Benjamin wrote that the L.A. Community Development Department had recommended "which programs to be canceled and which to receive lesser funding — Gensler was left as it was — (no change, to receive the whole $1 million)."
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Individuals associated with skyscraper owner Thomas Properties have contributed $5,000 to Councilwoman Perry's mayoral bid, according to the city's Ethics Commission, and $9,750 total to the city's politicians since the start of 2010. Individuals associated with Gensler have contributed $2,500 to Perry, and a total of $10,000 to the city's politicians since 2010.
Legal Aid lawyer Schultz says of the Gensler subsidy: "Like everyone else, I'm quite appalled."
She is reviewing her legal options.
Beth Mueller says Skid Row residents and Occupy L.A. this month will ask the City Council finance committee to pull the $1 million back and then take their case to the full City Council.