Crime Doesn’t Pay. Really? Is LA the Exception to the Rule?

Dick Platkin

02 July 2020

PLANNING WATCH-If you visit, work, or live in LA, you only need to step outside your office, apartment, or house to discover that crime does pay. You will see shady real estate deals, small, medium, and large, allowed by the crew at 200 N. Spring Street (City Hall). 

For every member of the City Council, like Jose Huizar and Mitchell Englander, or career officials like former Deputy Mayor and Building and Safety General Manager Ray Chan, who are facing jail time, there are many others clever enough to nibble at the cheese without getting caught. Their ranks include elected officials, mega-developers, departmental managers, lobbyists, campaign donors and consultants, expeditors, and cronies.

For example, a former Director of Planning recently paid a $281,000 ethics fine for buttonholing former colleagues on behalf of private developers. Even though someone squealed on him, no one went to jail, and none of the projects he championed lost their approvals or building permits. As for his fine, it was just another cost of doing business, a tiny fraction of the value of the private projects in his portfolio.

While this case attracted press coverage, there are countless others that fly below the radar, skillfully facilitated by campaign donations, charitable contributions, and honoraria. Furthermore, the developers and their paid advocates know that if their schemes are exposed, no one at City Hall will cancel a building permit, revoke a certificate of occupancy, or order a building demolition. 
What else you will you see in Los Angeles:  Despite City Council-adopted policies that new development must match the character and scale of existing residential developments, Los Angeles is filling up with McMansions and luxury apartments. They soar above nearby buildings, bring pain to your eyes, and generate homelessness, yet their ministerial and discretionary approvals sail through City Hall.

Proposed high-rise tower on LA’s Miracle Mile corridor.

The City’s Department of Building and Safety (LADBS) grants ministerial (administrative) approvals to these projects, often ignoring municipal ordinances. Those Angelenos who interact with this key City department have quickly learned that the spirit of its former General Manager, Ray Chan, still thrives.  Their “customers” are real estate developers, not the public. They rarely respond to code violation complaints, forcing residents to contact City Council offices in the hope that a field deputy can find the pulse of someone at LADBS.

City Hall’s treatment of building projects during the current Covid-19 Pandemic says it all. LA’s Mayor Eric Garcetti excluded all real estate construction projects from his executive closure orders, claiming they were essential. Feeling political heat, the Mayor then argued that construction was perfectly safe because contractors and workers meticulously followed LA’s and the CDC’s construction rules.  According to the LA Times, LADBS then claimed they inspected 24,000 construction sites to ensure that the City’s Covid-19 orders were being followed.

As I frequently argued through previous Planning Watch columns, these LADBS numbers were imaginary. After multiple inquiries through CityWatch, NextDoor, and Facebook, I eventually heard from two people who had first-hand experiences with these inspections. In one case, the construction site was told in advance when the LADBS inspector would drop by. The contractor showed up before hand and told his employees to temporarily put on masks and practice social distancing.
In another case, a neighbor of mine submitted multiple public health complaints to LADBS about an adjacent McMansion construction site. Eventually Building and Safety sent a letter permanently shutting the project down. Despite this official order, which suddenly vanished from the McMansion’s front fence, the construction work quickly resumed. My neighbor then submitting additional public health and code violation complaints.  Despite the City’s multiple executive orders, all posted on the LADBS home page, there is still no social distancing, haphazard use of face masks, no log of visitors to the construction site, and no hand washing or disinfectant stations. The most recent email from Building and Safety, sent a few days ago, told my neighbor to stop bothering them.
Furthermore, this McMansion, like countless others, is strictly a speculative real estate project.  Investors, cloaked as Limited Liability Corporations (LLC's), build them all. They will pocket at least $500,000 from each project. They also know that their completed McMansions will be larger, taller, and therefore more profitable than what the law allows. And, if they don’t sell, they can easily convert them into “illegal” short-term rentals or party houses. The lesson from these cases is that in Los Angeles crime pays well. 



Other types of white-collar real estate crime: LA's white-collar crime wave is hardly limited to the Mansionizers. The City Council has adopted a series or zoning ordinances that substantially increase the value of commercial property, in particular two density bonus ordinances, as well as Transit Neighborhood Plans. Administered by the Planning Department, they allow new, upscale apartment buildings to bust through the height, size, and density provisions of adopted zoning laws. None of this involves the pay-to-play cases investigated by the FBI. These white-collar delinquents are adept at keeping their City Hall deals out of view, while their projects get glowing photo spreads at real estate sites, like Urbanize LA.

Furthermore, these white-collar crooks know they have a minimal chance of coming under investigation and indictment.

They don’t worry about the LA County District Attorney, the Los Angeles City Attorney, or the LAPD’s white-collar crime unit (WCCU), even though it specializes in bribes to City officials.
They also know there is little chance that the City’s Ethics Commission will fine them for illicit campaign contributions and bribes. In the remote chance they get fined, they will treat it as the occasional cost of doing business at City Hall.   

Bottom line: The next time someone tells you that crime doesn’t pay, especially if they point to the cases of Mitchell Englander, Jose Huizar, or Roy Chan, please tell them to take a hike in nearly any Los Angeles neighborhood.

(Dick Platkin is a former Los Angeles city planner who reports on local planning issues for CityWatchLA.  He serves on the board of United Neighborhoods for Los Angeles (UN4LA) and is co-chair of the new Greater Fairfax Residents Association. Please email comments and corrections to rhplatkin@gmail.com or via Twitter to @DickPlatkin.) Prepped for CityWatch by Linda Abrams.