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Stellar Credit Ratings Lead to Millions in Taxpayer Savings

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Saving taxpayers millions of dollars in interest payments, Los Angeles County achieved its highest long-term credit ratings in a decade, thanks to an upgrade by Moody’s this week.

Moody’s joined Fitch and S&P, the Big Three credit rating agencies, in deeming the County to be very creditworthy and unlikely to default on its financial obligations. In upgrading the County’s rating from Aa2 to Aa1, Moody’s cited its “strong and stable financial position” and “strong management team that has positioned the County well to address ongoing challenges,” among other factors.

Treasurer and Tax Collector Joseph Kelly estimates every upgrade in the County’s long-term credit rating can slash interest and debt service payments on a $100 million loan by as much as $3 million over a 30-year period.

The Big Three also assigned the highest short-term rating to the County’s $800 million Tax and Revenue Anticipation Note (TRAN) issuance, which will finance current operations before tax revenues are received.

“Excellent credit ratings mean lower interest payments, saving the County millions of dollars that can instead be used to pay for critically needed public services,” said Board of Supervisors Chairman Mark Ridley-Thomas. “It also validates the County’s prudent, disciplined and conservative fiscal management with long-term strategic planning over the last several years.”

The credit ratings upgrade came after Board Chairman Ridley-Thomas, along with the County’s Chief Executive Officer Sachi Hamai, Auditor-Controller John Naimo, and Treasurer and Tax Collector Joseph Kelly met with representatives of the Big Three in New York late last month. Health Agency Director Mitch Katz, M.D. participated by teleconference.

They discussed the County’s efforts to build reserves, pre-fund long-term liabilities, and stabilize the Department of Health Services during a time of uncertainty over the fate of the Affordable Care Act. They also noted the County successfully went to voters seeking ongoing revenue for combatting homeless, which constitutes a threat to the solvency of the County with respect to the drain on resources associated with law enforcement and emergency health services.

The County, which has a budget of approximately $30 billion, has a track record of fiscally responsible practices, which allowed it to weather the Great Recession without substantial service cutbacks or any layoffs.

Right to Counsel Without Fees for Indigents

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Assistant Public Defender Candis Glover and Alternate Public Defender Bruce Brodie testifying in favor of eliminating the $50 registration fee. Bryan Chan/Board of Supervisors.

The Board of Supervisors approved a motion by Supervisor Sheila Kuehl and Board Chairman Mark Ridley-Thomas to revoke a prior County resolution that charged indigent defendants a $50 registration fee to obtain legal services from a public defender.

 “Charging a $50 registration fee to obtain a public defender undermines the constitutionally-protected right to an attorney,” said Board Chairman Ridley-Thomas said. “This motion will ensure that economic status does not prevent an accused from receiving proper legal representation.”

Supervisor Kuehl added, “Imagine you’re an indigent defendant and the first thing your ‘free’ government lawyer does is hand you a form that requires you to pay $50 within five days!”

“We want to be sure that low-income defendants who are eligible for legal counsel from the Public Defender’s office can actually get the services of that legal counsel,” she said. “That is their constitutional right.” 

Assistant Public Defender Candis Glover said the Public Defender’s Office is in favor of doing away with the fee, which is usually discussed with the client for the first time during arraignment. “We believe that discussing registration fees with a client you just met, when you’re trying to gain that client’s trust, and you’re trying to identify legal issues connected with the case, are barriers to our representation,” she told the Board.

Los Angeles County has “requested” that defendants pay the registration fee since 1996, to offset the cost of providing court-appointed counsel. It is estimated that the Public Defender’s office will collect approximately $300,000 in such fees for this fiscal year. Defendants who don’t pay are referred to a private for-profit collections agency to recoup uncollected registration fees.

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Representatives of the American Civil Liberties Union, Public Counsel and Human Rights Watch testifying in favor of the motion by Supervisors Mark Ridley-Thomas and Sheila Kuehl.

 

Impact of Cannabis Businesses

Board of Supervisors Chairman Mark Ridley-Thomas at June 6, 2017 meeting. Bryan Chan / Board of Supervisors

Los Angeles County Board of Supervisors Chairman Mark Ridley-Thomas issued the following statement regarding an ordinance prohibiting all cannabis businesses and activities in the unincorporated areas of the County. The ordinance also imposes reasonable regulations on personal cannabis cultivation while businesses are further studied for potential regulation.

Many of us here face a great task — that of implementing Prop. 64. The ban does not mean that we are reinstating the war on drugs or that we are opposing the vote of the people. We are trying to create rational, responsible, and accountable cannabis commerce. This is not a gold rush for businesses. It is the people of California calling for smart, responsible regulation of marijuana, and those who operate illegally are in direct opposition to this call for accountability, transparency, and responsibility.

This is particularly salient in the 2nd district, where both alcohol and marijuana businesses have operated irresponsibly for years, wreaking havoc on not only the quality of the neighborhoods, but the health and safety of our residents. We know this given our failed efforts to date to control the sale of cannabis in County unincorporated communities, which has been illegal since 2010. We also know this given our efforts to regulate alcohol sales with its well documented history of causing blight and increased crime in our disadvantaged communities.

The Board recognized the necessity of establishing enhanced standards of conduct for liquor stores with the recent adoption of the “Deemed Approved” Ordinance for pre-1992 liquor licenses. We can expect that the sale of cannabis will have comparable impact including increased crime, addiction and private sector disinvestment in neighborhood-serving commercial corridors.

And unlike alcohol, cannabis remains illegal under federal law, which adds to the difficulty of effectively regulating the business. There can be no doubt that businesses that operate outside the legal banking system and federal law and taxation regulations are particularly vulnerable to infiltration by organized crime and gangs.

The County needs to establish guidelines and regulations for the cannabis industry to minimize these anticipated negative impacts. We need rules focused on creating responsible and accountable cannabis commerce. Equally important, we cannot ignore the public safety and public health issues associated with cannabis. We can expect that the issues we confront as we move forward will be unique and more profound than has been the experience in other jurisdictions.

Likewise, we regulate personal cultivation, to the extent allowed by the law, because one’s right and choice to use marijuana does not negate their obligation to be a good neighbor. These are psychoactive substances with a pervasive odor that must be grown and kept in a responsible manner.

Los Angeles is not Denver or Seattle. The problems we face are far more dynamic and impactful, requiring a sustained investment of time and resources. We should look to the industry to provide the resources the County will need to address the impacts from the cultivation, distribution and sale of cannabis in those communities that allow it. The County must prepare itself, not just as it pertains to land use regulations, but in addressing the public health impacts on our youth and vulnerable populations, and with the increased resources that will be required to address the foreseeable demands places on public safety resources.

Legalization of cannabis in California will have a disproportional impact on low income communities and communities of color. We cannot let businesses profit off of these communities until we can effectively minimize these negative effects and regulate these businesses for the benefit of these neighborhoods.

A Call to Action on Homelessness


Board of Supervisors Chairman Mark Ridley-Thomas issued a call to action after the 2017 Greater Los Angeles Homeless Count found Los Angeles County’s homeless population increased 23 percent over the past year to 57,794.

“We have business to do,” Chairman Ridley-Thomas said at a press conference organized by the Los Angeles Homeless Services Authority (LAHSA). “No hand-wringing, no fretting, no ‘woe is me’ – it’s just simply time to roll up our sleeves and do what we know needs to be done. You’ve got to be ready to fight to end homelessness in the County of Los Angeles.”

Chairman Ridley-Thomas said voters’ passage of Measure H in March and Proposition HHH in November has “afforded us an opportunity to do what we have never ever had the opportunity to do in this region, and that is to step forward with our imagination, our compassion, our resources, and confront the issue of homelessness in the County of Los Angeles.”

“I am not at all discouraged by this (Homeless Count),” Chairman Ridley-Thomas added. “Many of us sensed that there was an uptick, and these numbers validate that. The good news is that we have the capacity, for the first time, to stand up to it.”

Measure H is a 1/4-cent sales tax expected to raise $355 million annually for services to the homeless countywide. It creates an unprecedented funding stream expected to move 45,000 homeless men, women and children into stable housing within the next five years, and provide them with the high-quality, multi-dimensional supportive services they need to succeed in the long run. It is also intended to prevent an estimated 30,000 people from becoming homeless in the first place. Proposition HHH, meanwhile, is a $1.2-billion bond measure estimated to build 10,000 units of permanent supportive housing in the City of Los Angeles.

“We have no excuse not to do our very best because we are now equipped,” Chairman Ridley-Thomas said, adding the County’s Homeless Initiative is “digging in deep” and so are city governments, nonprofit service providers and others engaged in the fight against homelessness. “There’s an army out there, and we’re ready to do what we must do,” he said.

On June 13, the Board of Supervisors will hear the final report of a 50-member planning group convened to develop funding recommendations for the first three years of Measure H revenue, totaling about $1 billion. Implementing those recommendations will begin in earnest during the new fiscal year, which begins July 1. Core strategies include:

  • Sending outreach and engagement teams to reach the homeless on every street corner;
  • Providing permanent housing with healthcare and other services;
  • Expanding rapid rehousing for the newly homeless;
  • Enhancing the emergency shelter system, including for those leavings jails and hospitals; and
  • Strengthening the network of community nonprofits already serving homeless single adults, families and youth.

“This planning effort has not been done in haste,” Chairman Ridley-Thomas said. “It is a reflection of years of work, principally by the City of Los Angeles and the County of Los Angeles with the input of thousands of stakeholders, to develop plans to deal with homelessness in a collaborative way.”

Also in attendance at the press conference were Mayor Eric Garcetti, Councilman Marqueece Harris Dawson and LAHSA Commissioner Wendy Greuel and Executive Director Peter Lynn.

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Cutting-Edge Data Center Saves Millions

Board of Supervisors Chairman Mark Ridley-Thomas speaks at the unveiling of DataCenter1 in El Segundo. Photo by Diandra Jay / Board of Supervisors

Breaking new ground in the digital age, Los Angeles County unveiled Data Center One, modernizing its information technology infrastructure while saving taxpayers hundreds of millions of dollars. 

Located in El Segundo, the privately leased facility dubbed “DC1” will replace the County’s 49 data centers and provide greater security and efficiency for millions of documents and transactions, from health assessments to online book catalogue visits to pet adoptions.

Consolidating dozens of scattered data centers into a single facility operated by T5 Data Centers frees up to 67,000 square feet of space while expanding the County’s capacity to support 603 databases, store approximately 33 million documents, and process 83 million transactions per month. DC1 also has state-of-the-art energy efficiency features and enables fast access to new technologies and sophisticated data analysis tools to empower faster resource allocation, smarter decision-making and more efficient operations.

“We are on the path to modernizing countywide information technology, and we are doing it in a cutting-edge, cost effective and energy efficient way,” Board of Supervisors Chairman Mark Ridley-Thomas said as he cut the ribbon during the grand opening ceremony. “It’s the pinnacle of what public-private partnership should be.”

 “This facility will save the County hundreds of millions of dollars,” he added. “That means more dollars available to provide LA County residents with the goods and services they really need. Whether it is fighting homelessness, promoting child protection, or a variety of other initiatives, those resources will be put to better use.”

Chairman Ridley-Thomas co-authored the motion directing the County’s chief executive officer, chief information officer and Internal Services director to merge the County’s 49 data centers and consolidate the technology infrastructure of the County’s 37 departments into a single facility. The goal was to reduce the cost of hardware, software and operations; shift to more efficient computing platforms; use less energy and real estate; and boost cybersecurity.

Leasing the DC1 costs $2 million a year – far less expensive than the 58,000-square foot data center that the County’s previous CEO originally recommended building for over $200 million, not including power, cooling and operational expenses. Concerned that the original proposal was too expensive, oversized, and likely to become obsolete, Chair Ridley-Thomas asked the Board to consult an independent expert. Gartner Inc.’s analysis concluded that leasing no more than 10,000 square feet of space would be more efficient, both operationally and fiscally.

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