LA to Annex Vernon?

Worst. Idea. Ever.

From LA times:

Los Angeles City Councilwoman Janice Hahn on Wednesday introduced a motion calling for Los Angeles to annex Vernon, the small industrial city that has come under fire for the salaries and benefits paid to its top officials.

Hahn is the latest in a growing group of city and state officials pressing for drastic action in Vernon. Her motion was referred to the city's Planning and Land Use Management Committee and will be voted on in the next weeks, her chief of staff said.

Here is the story behind Vernon. It is a dictatorship. It may be a corrupt little fiefdom in the middle of Los Angeles. But it is a business friendly fiefdom, it is a wonderful industrial playground where the bureaucracy, the politics and basically all the BS associated with the anti-business practices of Los Angeles are avoided.

If LA annexes Vernon, I can almost guarantee it will kill businesses that operate there. They will move to Commerce, Irwindale, Industry or the Inland Empire because doing business in LA COSTS MONEY relative to these other options.

Kosmont does an analysis that compares the cost of doing business in various cities.

Here is what the rating of LA is: $$$$$ - 5 dollar signs, the highest possible rating of cities to avoid.

Here is some of what it costs to do business in LA:
Utility Tax Rates: Electric: 10%, Telephone: 5%, Cellular: 5%, Gas: 10%, Water: 0%, Cable: 5%

Development impact fees, public facilities fees, traffic impact/ trip fees, art in public places fee.

For wholesale sales, for every $100 in receipts you need to pay $1.09

Now compare that to Vernon:

Kosmont has a rating of $$, which is among the lowest in Southern California.
Utility Tax Rates: Electric: 0%, Telephone: 0%, Cellular: 0%, Gas: 0%, Water: 0%, Cable: 0%

There are no misc fees, unlike in Los Angeles.

For wholesale sales, for every $100 in receipts, you need to pay $0.06

The City of Vernon has its own light and power department, which basically subsidizes heavy power users.

No contest,

If LA were to annex Vernon, the only jobs it would create would be government jobs. Existing businesses would most likely relocate to other areas because the taxes and regulation of doing business in LA is outrageous.

I really wouldn't have such a strong opinion, except that I am trying to start a business in LA and I know first-hand the costs of such fees and red tape.

Truck MPG

The Obama administration is looking to make the nations trucks more efficient, requiring a 20 percent cut in emissions in model 2018 trucks. (Source: Bloomberg)

The work trucks covered by the proposal make up 4 percent of U.S. vehicles while
accounting for 20 percent of the oil consumed, according to the Union of
Concerned Scientists, a Cambridge, Massachusetts-based environmental group.
Long-haul tractor-trailers get about 6.5 mpg, the group said

MGP measure how FAR a truck can go on a gallon of gas, but a much better metric is how many ton-miles (or how MUCH) a gallon of gas will produce.

This study has the following:

Trucks: 250 Ton Miles
Rail: 437 Ton Miles
Barge: (local waterways) 545 Ton Miles
Ocean Cargo: 574 - 1050 Ton Miles (depending on the size of the ship).

Since trucks account for about 70% of all cargo shipment volume, minor increases to the ton-miles of trucks will greatly reduce oil consumption and CO2 gasses.

City Planning As Masturbation

There was a conference here downtown this past week entitled "Downtown 2020: Continuing the Renaissance" where planners views of Downtown L.A. 10 years in the future, with more housing, more jobs, improved infrastructure etc.

I am staring out my window at 2 completed EMPTY skyscrapers that were meant for luxury condo's, so I am not sure that more housing is really the problem. I am not really sure who they were expecting to live there but I would wager the price point would be out of reach of the average family. That and I would bet that their marketing was geared towards "Young Urban Professionals (without children)" or "Empty Nesters".

Panelist Christine Essel, CEO of the Community Redevelopment Agency of L.A.,discussed the need for more housing. “We would like to see another 5,000 units come online in this decade,” she said. “It is important for families to live downtown and not feel like they need to move out.” In order to accomplish that, she pointed to things like infrastructure and transportation needing some upgrades, in addition to bringing in an elementary school.

Well, have I got a broker for you to talk to about bringing more schools downtown.

Both Michael LoGrande, director of planning for the City of L.A., as well as Bill Witte, president of Related California, pointed out that connecting the different neighborhoods that have grown organically into one neighborhood is an important step. “I think there is potential for L.A. to break down the barriers that separate it, and blend it with the rest of the city,” said Witte.

What bothers me is that these people know what is best for everyone. Why not mix K-Town and MacArthur Park, why wouldn't these two groups of people love living together? Why not destroy the culture that makes these regions unique into one giant MonoCulture? They "grew organically" that way, and you think, Mr. City Planner, that you know better than the 1000's of people whose individual choices created the world the way it is?

However, a weakness in the transit system, according to Leahy, are the visuals such as dead landscaping, potholes and debris that transit riders see on their way into L.A. “If you come into L.A. on a bus or train on a freeway, you would not be impressed,” he said. “You need to look at this place through the eyes of a visitor and enhance the beauty of the wonderful things that are happening here
in L.A.”

Really? I think the weakness of the transit system is that it take 40 freaking minutes to get anywhere, the bus drives so slow and erratically that you are in many cases better off driving or even walking, plus you get to sit next to smelly homeless people and many times it is more expensive than actually driving? And you are worried about dead landscaping? Way to deflect criticism there.

Downtown remains the city’s economic engine, said Carol Schatz, president and CEO of CCA. “The current renaissance has transformed Downtown Los Angeles from a nine-to-five business center to a residential, cultural and entertainment destination, bringing 27,000 new residents, 93,500 new jobs, $180 million in tax revenues to the city and county and $10.9 billion in business revenues,” she said. She added that “It is critical to Los Angeles' economic future that this renaissance continue.”

Downtown as the "Economic Engine of LA?" Have you ever even seen the Port of Los Angeles, which is responsible for 1 in every 7 jobs here in LA? But hey, at least they are trying, right? So why not hold a self-congratulatory conference to talk about what a great job they have been doing?

Africe is really big

Here is an interesting graphic that overlays some of the largest countries with Africa. I had no idea that you could fit all of China, the United States, India AND ALL OF EUROPE into Africa.

One Hot Listing

So one of our retail brokers buildings made the news last night. In a bad way, it caught fire. I am sure things like this happen all the time, but it really sucks when it happens to someone you know.





Well, you know what they say, there is no bad publicity. And I am sure the landlord will probably come down on his asking price a bit, otherwise this deal may end up in smoke.

We are not talking fire-sale prices here, but this property is priced to move ... everyone in a two block radius.

Ok, enough for now.

FIFA in LA?

Looks like LA is in the works for the World Cup in 2018 or the 2022 games.

Possible sites would be the City of Industry.

That would be one big economic impact for the region.

MGA Entertainment Sued Again!

MGA Entertainment - the maker of the Bratz! dolls, and who has a 700K SF warehouse in Redlands, is being sued by a toy maker in Texas. Here is the article.





Here are the Legand of Nara bugs that MGA makes:








And here is the Hexbug made by the company in Texas:

On the surface, these two things do not appear all that much alike. But I would wager that the suppliers for these two toys are probably the same people. And the companies shipping the toys are likely the the same people. When your entire supply chain is outsourced all that remains is product development and marketing.

I would wager that in other areas of the world, your intellectual property rights are not as enforceable and any kind of leak can occur anywhere along the supply chain.

I have often wondered about this phenomenon in movies, why very similar movies are released by different major motion picture companies at the same time.

Think of the movie AntZ and A Bugs Life. Why are the odds of similar movies being released independently by two companies? Chances are that the people that work at these companies talk to each other and they get sold on the same idea. There are informal channels of communication and good ideas tend to get copied.