Los Angeles CAO on City Budget Transparency & Asset Management

You became Los Angeles CAO in February 2018—assuming responsibility for the city budget, labor negotiations, procurement, and asset management, as well as impacting many major policy issues. How have you prioritized the aforementioned?

Richard Llewellyn: The CAO is the person who helps elected officials realize their dreams for the city—the dreams that the city and residents, including myself, all care about.

What is that? It’s what many councilmembers and the mayor have called going “back to basics.” Residents want to see police, fire, streets, and other needs maintained at a high level. My job is to help the city serve these basic functions for a large, diverse population.

One challenge we face right now, particularly for our lowest-income population, is the price of housing. Homelessness is the most visible reflection of this challenge, but in fact, many more of our low-wage residents are having a tough time in our very expensive housing market.

When your predecessor, Miguel Santana, left as LA’s CAO, he told The Planning Report there were three “fundamental principles” for a CAO: independence; identifying a path forward after analyzing problems; and helping the Council build consensus. Do you agree?

I share the view that the office needs to be independent and to call things as we see them—not only when it comes to disagreements between City Council and the mayor, but also when it comes to the residents. That is our highest priority.

While being an independent watchdog, I think my job is also to be helpful. It’s not just about saying, “No, we can’t afford to do that.” It’s about helping policymakers get to yes on solutions to the problems facing Los Angeles residents. 

“Getting to yes” could be challenging if Los Angeles were bankrupt—which it came close to becoming just a few years ago. Is this no longer the case? 

No. We are in fact close to structurally balanced, and our current forecast has us becoming structurally balanced in a couple of years. But it’s a constant challenge.

Every year, we report on our structural deficit or lack thereof and also issue a forecast for the four years ahead. In my experience, the mayor and the Council, particularly the budget chair and council president, follow this reporting closely. This is not an issue that they are trying to pass on to a future generation; they care about it deeply now.

Successful ballot measures in the past two years have supplemented the city’s General Fund and generated resources to address both the Mayor and Council’s priorities, particularly homelessness. Elaborate on the new resources available to the city to meet its present and future responsibilities.

First, I want to thank our residents—locally and throughout the state—for voting with their pocketbooks to try to solve this issue. In short order, we saw the countywide Measure H to fund services; the citywide Proposition HHH to fund construction of housing; and now two state measures to provide even more money for housing. All of these came at a real cost to our residents, and they were willing to pay it. They are willing to participate in the solution.

The city’s bond measure is about $1.2 billion. It was passed at the end of 2016, and we had already funded our first projects in 2017. In just the first two years, we’ve funded more than 2,100 units and committed funding to another 1,500. Now, this is construction money, so it will take a couple years for the projects to come online. That’s frustrating to me and our residents; we all wish the construction timeline were shorter.

The county’s services money is about $355 million a year. In this second year, they’re going to come close to spending all of it, and by the third year, they expect to have spent every dime or even more. What this shows is that both sides have gotten the money out on the street very quickly, and we are hoping to start seeing the results.

Our homeless count went down very slightly this year. That’s great, but it’s hard to see this many people still living on the street as a win. We need to keep our feet on the pedal to get these units built and to get these services on the street.

Here in the city, we are also working very hard through the program A Bridge Home to construct temporary shelters for the window before the permanent housing is built. Our goal is to get as many people off the street as possible, and, while they’re in the shelters, get them wraparound services so that they’ll ready to move into housing when there are units available.

Elaborate on the challenge of reconciling the growing demands on the city’s limited resources with the need to deliver on program expectations for issues such as homelessness.

It’s all of our jobs to figure out how to do more with less, and to make hard choices about what to do first if we don’t have enough to do everything. My job is to help all of us—particularly our mayor and council—make those decisions wisely, and then to be honest with them and with the public about how we’re doing toward the goals we’ve identified.

There is never going to be enough money for everything we want to do. But I think the council and mayor have generally agreed with the residents on our highest priorities: the basics.

We spend 70 percent of our money on public safety, which is the backbone of what local government does. We went to the voters with Measure M and to Sacramento with SB 1, saying, “We need to spend more money on our basic road infrastructure and mass transit.” We went to the voters with the countywide Measure W, saying, “We need to fund our basic stormwater system.” In every case, our residents were willing to step up. I honor them for that, and I think one of the reasons for it is that there is a consensus among the policymakers on what we need.

Now, there’s a consensus that the next place we have to spend money is the ongoing and worsening problem of homelessness. There was a consensus in Sacramento and a consensus in City Hall, and both sides went to the residents and asked, “Do you agree with us?” And the residents did. So, I actually think our priority list is fairly sensible and that we’re working through it in a sensible way—and, of course, we wish we had more money.

Given the recent generosity of Los Angeles voters, should we expect a reckoning about performance in the next year? And if so, will it fall to the CAO to help the Council and Mayor explain to the public what can and can’t be done?

There is, and should be, a reckoning on every one of these priorities. We work in the public eye for the public, and our residents should hold us accountable. That includes elected officials, appointed officials, and city workers. I believe in that, and I support that.

The City Administrative Office is part of the system of accountability. We try to be as helpful as possible in explaining what choices the City Council and mayor are making in spending their money, and we try to ensure there’s a clear expectation among residents, voters and non-voters alike. That is one of our jobs, and it’s one of the reasons we do a four-year forecast and not just a one-year budget. It’s also one of the reasons the budget, which can be a pretty arcane document, also includes many separate charts at the back that explain how we’re spending money on streets, homelessness, and other issues.

Using HHH as an example, we are spending considerable staff time within the CAO to report accurately and publicly on exactly what’s happening with that money, and to stand up to public oversight about how fast it’s going out the door and how much each unit costs. I welcome that public scrutiny.

Given abundant reports of declining newspaper readership and civic engagement, has there been a concomitant decline in voter awareness of what money is raised and spent in the city?

I’ve served in various capacities for the city and county for many years, and I actually think that in some ways, there is more public engagement on this issue today than in the past—particularly in the city of Los Angeles.

It’s true that there used to be more news outlets, but I also think there were fewer people actually engaged in the day-to-day civic process. Our neighborhood council system has changed that for Los Angeles. The neighborhood councils are like hyperlocal government, and each of them has a budget committee on top of our citywide budget committee. Through them, residents actually have more access to the local budgeting process than they did 20 years ago.

That said, it’s exciting to me that the Los Angeles Times has new leadership that says it’s going to invest in the paper. Meanwhile, KPCC is also increasing their local coverage. Local coverage is only good for the city; it makes us, first, be transparent, and second, step up. The more local coverage, the better.

You and your immediate predecessor have both prioritized improving the city’s asset management program and optimizing use of city-owned properties. This may be especially important as the federal Opportunity Zones program raises the prospect of independent investment in such assets. How is the city’s asset management system being upgraded?

There has been a lot of real progress in city asset management.

The first thing we had to do was come up with ways to count and record our assets better to then evaluate what to do with them. I applaud Mr. Santana and the mayor and council for realizing that they needed to invest in systems. Our asset management systems were not up to modern standards. Now, we have purchased, created, and are populating more fields every day in a new robust asset management system that is both internal- and external-facing.

The second step is to evaluate what to do with the assets we have. At the end of last year, our office and the General Services Department completed a report recommending uses for every surplus property in the city of Los Angeles. That was a big task.

Unfortunately for our economic development goals, it turns out that the city doesn’t have lots of large-lot properties that are well suited for redevelopment. But those we do have, we’ve identified and begun putting to use; we’ve even sent properties to the Housing Department for housing development.

We now have a handle on our surplus property and have moved on to looking at other assets. Currently, we are looking at all our maintenance yards and shops. We have a lot of them. And we need a lot of them—we couldn’t serve all of Los Angeles from one location. But many of them were designed decades ago, and we need to look at whether we are maximizing their use or whether there are better ways we could use that land today.

The next biggest set of usable properties we have are our parking lots. They’re generally flat; they’re all over the city; they’re mostly in urban neighborhoods or behind commercial districts. There are certainly opportunities to do something with many of these lots. Some are being used for housing development. Some are being used as temporary homeless housing in the Bridge Home program. We’re also finding real economic opportunities in partnership with the Department of Transportation. And even if we continue using some of these lots for parking, we could build upward to increase their capacity.

All in all, the city is being much more proactive about figuring out what to do with our land and buildings.

Vendors have repeatedly described the city’s procurement process as “impossible to navigate.” Has procurement in the city improved?

We have made a lot of progress on this issue. Last year, Mayor Garcetti hired the city’s first Chief Procurement Officer, Michael Owh, in the General Services Department. They have been taking a comprehensive look at streamlining our procurement system, talking to consumers all over the city. My office is also part of this process.

In the first phase of this project, the city is taking the systems approach. We’re asking: Does our system make it easier to contract for items, like supplies; for services; and for specialty items?

The next phase is looking more closely at services. This is harder to set up than a system that just orders paperclips, because each service is a little different. But that doesn’t mean we couldn’t make it easier to apply for contracts.

To conclude, local control is clearly being challenged by California’s State Legislature, especially with respect to housing supply and densification. As the CAO of one of the most populous cities in the state of California, what is your view on the sanctity of local control?

It’s hard for policymakers and residents to give all their power to Sacramento or to Washington—and I don’t think they should.

Like many state legislators, I want to see more homeless housing everywhere in the city. But our local policymakers and residents need to buy into that, because it won’t succeed otherwise. There are moral and political reasons for that as well as practical one—such as that the city would get sued and that would add three years to building the project.

The approach that seems reasonable to me is for Sacramento to set a goal for a certain amount of housing or growth, and let cities figure it out from there. A goal from Sacramento or Washington could be helpful in encouraging local governments to step up. But telling city councilmembers that the street they’ve spent 20 years turning into an urban oasis now has to be redesigned totally differently, despite all the investment and time already put into it, is not going to work. Local government needs to have a say in where density goes in our city—where it’s better to build up, and where it’s better to leave low.

I would add that in Los Angeles, we’ve already been stepping up. We passed local measures, like Measure JJJ, to increase density along transit lines before Sacramento said it was important to do so. Our policymakers know that LA needs more density, and now they’re trying to figure out where to put it.