A significant clue on why the City of Los Angeles is facing budget deficits of hundreds of million annually for the foreseeable future can be found in the relationship between elected officials and AEG, the company that’s controlled by Denver-based multi-billionaire Philip Anschutz.
AEG owns the Staples Center and the adjacent L.A. Live, which includes shops and restaurants to go with one nice hotel and another luxurious establishment that will be topped by high-priced condominiums when completed.
AEG has a prime a seat on a gravy train of benefits ladled out by our city and state governments. Those hotels came with a tax break that is expected to amount to tens of millions of dollars over coming years. The city also provided attractive terms on a $70 million loan for the project. State legislators have passed laws that appear to many rational observers to have been crafted specifically to steer tens of millions of dollars worth of benefits to AEG.
Some politicians like to say that AEG is deserving of such largesse because it has brought development and jobs to the city’s center. That’s appreciated, but let’s not forget that AEG is a private enterprise that’s in the business of making money. The company had to develop some land and hire some workers to make money on its plans Downtown. It would be nice to see the company’s investment earn a tidy profit, but there’s no case for sainthood in any of the business plan.
Meanwhile, AEG has been a patron saint of sorts when it comes to local politics, giving hundreds of thousands of dollars to various candidates and campaigns. The company even pitched in with $137,000 – the largest of all contributors – to a ballot measure that extended term limits for members of the City Council.
Do you see some possible connection there? Is there a chance that some corporate executives have used money to gain influence over public officials?
Ask around and you’ll find that most everyday, working voters see a connection – or at least the possibility of one.
And here’s where we get to the explanation on the hundreds of millions of dollars in budget deficits: It seems that members of the political class don’t ask around – and they don’t think regular folks are smart enough to call elected officials to account.
What else to make of recent comments by 9th District City Councilmember Jan Perry, who represents most of Downtown. Perry has looked like AEG’s personal body guard during the recent fan dance over suggestions that the company should pay some re-imbursement for public services dedicated to the memorial service for Michael Jackson earlier this year, a tab that came to approximately $3.2 million. Some say that AEG should pay up because the company benefited from the spectacle surrounding the singer’s death by selling rights to film footage from his final days, when he used the Staples Center for preparations on what was to be a global tour.
Perry recently took the opportunity of the flap to dismiss concerns that AEG uses political donations to exercise undue influence over city officials.
“AEG doesn’t own the place,” said Perry, referring to City Hall in a recent story in the Los Angeles Times. “I think that’s a really stupid way to think.”
Perry got away with an old political trick there, putting over-the-top words in the mouths of any mere taxpayers who might have questions about the relationship between AEG and elected officials. She ramped up the charges in a pre-emptive logical fallacy that dismisses anyone with suspicions of influence peddling as unworthy of an opinion on the matter.
Perry must think that anyone outside of City Hall is stupid, indeed. Stupid enough to fall for that verbal twist. Stupid enough to think that there’s nothing to any suspicions unless it can be proved that AEG actually holds a mortgage on City Hall.
The people are not stupid, though. Voters know that influence peddling is a shadowy business, and that big corporations and the executives who run them are careful about the legalities and perceptions that come with the flexing of their political muscles.
You’d think a politician with Perry’s experience would be just as careful about calling voters stupid. After all, they’re smart enough to pay for all of those breaks for AEG – not to mention her salary.
Jerry Sullivan is the Editor & Publisher of the Los Angeles Garment & Citizen, a weekly community newspaper that covers Downtown Los Angeles and surrounding districts (www.garmentandcitizen.com)
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Development and jobs?
"Some politicians like to say that AEG is deserving of such largesse because it has brought development and jobs to the city’s center...." We hear this all the time. Has anyone ever actually studied this notion? How much revenue, compared to the profit kept by the controlling entity - the owner - gets into citizens' hands? The "jobs" created by a place like the Staples center are either mega-millions to a handful of celebrities, another mega-million to the owners, a handful of sporadic union support jobs and the rest very low paid maintenance staff. Just look at the neighborhood around Staples (or pick any number of convention/sports centers nationwide for the same view) and see what this giant white elephant does directly for the city.