Los Angeles County Grand Jury • 1990-1991

Acknowledgement The special efforts of our staff have been invaluable in assisting the Grand Jury*

Published: March 11, 1991 193 pages Consolidated Report

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Note: Missing finding numbers detected: F20

Findings 20 findings

the cable companies have been able to charge subscribers as they see fit. Numerous attempts have been made by Congress to reimpose regulations to allow cities to control consumer rates. To date, including the 1990 Congress, all attempts to re-regulate have failed.

Little variation was found between the franchise fees paid to the cities by the cable companies. (See table in the Appendix.)

Various city representatives stated that they received many complaints about poor service and reception. The contracts all include provisions for cancellation of the franchise if the cable companies do not provide satisfactory performance. Some cable companies are attempting to improve equipment, but in exchange are

increasing their basic fees.

The City of Los Angeles has ordered one of their franchisees to improve their service and performance under threat of cancellation. These improvements are now underway.

Spectacor, which supplemented the above mentioned Memorandum of Agreement. In sum, it provided that subject to the executing of a 20 year agreement between Spectacor and the Raiders providing for the Raiders to play their home games at the Coliseum, the Commission and the Raiders would cause pending litigation to be dismissed with prejudice as to both parties. In September 1990, an Inducement Agreement was entered into between the

Commission and Spectacor Management Limited Partnership, which stated that Spectacor and the Los Angeles Raiders were entering into a new Raiders Agreement which provides for the Raiders to play all of their home games at the Coliseum for 20 years, and additional agreements, including a loan and security agreement and a non-recourse promissory note. The agreement further provided that the Commission would execute a Resolution Agreement and Mutual Release Agreement relating to litigation with the Raiders. The Inducement Agreement further stated that in the event the agreement with the Raiders is terminated prior to the renovation and construction of the Coliseum, Spectacor would pay to the Commission the difference between costs incurred by Spectacor and $15 million, in addition to certain other sums of money.

In September 1990, a Resolution Agreement was entered into between the Commission and the Los Angeles Raiders which provided that both parties would dismiss their pending litigation against each other, and the parties further executed a Mutual Release Agreement, setting forth theterms and conditions of the release of all claims, including the claim of $6.7 million which had been asserted by the Commission against the Raiders.

In September 1990 Spectacor entered into an agreement with the Los Angeles Raiders which provided for the Raiders to play all of their home games at the Coliseum for 20 years, commencing upon the completion of the construction and renovation of the Coliseum by Spectacor. Spectacor has stated that as a part of the agreement entered into between it and the Raiders, it committed itself to spend $15 million, $10 million of which was a loan to the Raiders, the additional $5 million to be spent in fees and expenses preparatory to commencing construction and renovation of the Coliseum. The Management Agreement dated August 2, 1988, and the Memorandum of Agreement and Letter Agreement dated March 26, 1990, were executed by MCA/Spectacor Joint Venture, by Spectacor, Inc., General Partner of Spectacor Management Limited Partnership. The Inducement Agreement dated September 11, 1990, was executed by L.A. Facilities Corporation, General Partner of Spectacor Management Limited Partnership. The August 2, 1988 Management Agreement provided that the Agreement could be

F10

Provide additional space or trailers needed to alleviate overcrowding at North Hollywood Health Center and Tujunga Sub-Center.

F11

The Department of Recreation and Parks has not prepared itself to offer constructive suggestions for improvements in concession operations. Reportedly, city zoo staff frequently visit concession operations to evaluate performance. Apparently, these visits are not regular, nor are evaluations based on documented criteria. The city has not developed standards by which it can systematically evaluate and offer suggestions to improve concession operations. Barriers to Improving Zoo Management and Support

F12

The city has been without a Zoo Director since January 4, 1991 and the level of compensation is an issue in recruitment. The Zoo's Director of 16 years retired. A nationwide search for his replacement is in progress. It is anticipated that the preferred candidate will be identified by the Department of Recreation and Parks by June 30,

F13

During meetings with the Commission, the committee was told that the Commission was relying upon Spectacor Management Limited Partnership and its affiliation with Spectacor Management Group that, with its affiliates, manages stadiums and convention centers all over the country. In addition, the Commission stated it was not concerned that MCA had terminated its joint venture with Spectacor, but would contact both parties and seek documentation confirming the termination agreement.

F14

The committee was unable to obtain financial information about Spectacor Management Limited Partnership from the Commission. It was, however, provided brochures describing Spectacor Management Group, Spectacor Management Group International, and Edward Snider, reported to be the founder of Spectacor Inc., a privately owned holding company. It has also been reported that Mr. Snider had taken in two partners in Spectacor Management Group: (1) ARA Group, the nation's largest caterer and stadium concessionaire, and (2) Chicago's Pritzker family, owners of the Hyatt Hotel chain.

F15

During meetings and interviews of Commission members and others associated with the Commission, questions were posed concerning Spectacor's ability to obtain the private financing for construction and renovation of the Coliseum, identity of the principal parties who may be part of the Spectacor Management Limited Partnership and L.A. Facilities, Inc., the financial strength of the Spectacor participants, and other questions concerning how both the public and the Coliseum Commission would be protected in its dealings with Spectacor.

F16

The Commission told the committee that the proposed renovation of the Coliseum would be privately funded without public guarantees and that no physical liens on the Coliseum would be allowed. Both surety and performance bonds would be required to be obtained prior to commencement of the proposed renovation of the Coliseum by Spectacor.

F17

With respect to whether or not Spectacor Management Limited Partnership has the financial strength to secure funding for the renovation of the Coliseum, the committee was told that ordinary project financing would be utilized where the primary security for the lender would be the ability of the project to generate revenues, which would be dependent upon Spectacor's ability to lease the premium seating at the renovated stadium, and its ability to manage the facility in a profitable manner.

F18

The committee was told that Spectacor Management Group and its affiliates have a proven track record of managing stadiums, arenas and convention centers around the world; and that at each such facility, a special purpose entity affiliated with Spectacor Management Group has been formed for the purpose of managing and acquiring project financing. In addition the committee was told that in these situations, separate financial statements are not regularly prepared, and that Spectacor Management Limited Partnership did not provide such information, nor had it been requested. The Commission indicated that Spectacor would provide banking references if required to do so.

F19

Notwithstanding the publicized financial worth or stability of Edward Snider, ARA and the Pritzker family, none of those individuals or business entities appear on any of the documents or agreements reviewed by the committee or provided by the Commission. Absent information concerning the identity and financial ability of Spectacor, Inc., Spectacor Management Limited Partnership or L.A. Facilities, Inc., the committee could not determine whether, and to what extent, any or all of the above-mentioned entities may be able to secure financing in the amount necessary to commence the construction and renovation of the Coliseum, as is required to be undertaken in accordance with the agreement of March 26, 1990. Since the Los Angeles Memorial Coliseum cannot be encumbered, the committee determined that it was unable to make any factual findings concerning the ability of any of the entities mentioned above, to obtain financing from a reputable financial institution or investment banker of recognized national and/or international standing. Spectacor Management Limited Partnership was granted the right to use the name of the Coliseum during the term of its lease. The committee was told that while all advertising and use of such names were under the control of Spectacor Management Limited Partnership, it had agreed that no alcohol or tobacco advertising would be used in the name of the stadium, nor had it been notified that Spectacor Management Limited Partnership had any plans to date to change the name of the stadium for commercial purposes.

F21

Spectacor Management Limited Partnership will continue to manage the Los Angeles Sports Arena and the Los Angeles Coliseum under the 1988 Management Agreement, which will end June 30, 1993, subject to Spectacor exercising its option to renew for an additional five years. The Commission may in the future enter into an agreement with Spectacor Management Limited Partnership to replace the current agreement, similar to the March 26, 1990 Memorandum of Agreement.

Recommendations 15

R1

rates, they should enforce contractual compliance of service and performance standards by holding public hearings and exercising their right to terminate the cable franchise contract when service and performance standards are not adequate.
R2

The Grand Jury recommends that the cities seek legislation to re-regulate cable companies and give cities control over subscriber fees. B. COLISEUM COMMISSION CONTRACTUAL RELATIONSHIPS WITH LOS ANGELES RAIDERS, et. al.
R3

that it may not assign the Master Lease or any part of it, including the right of Spectacor Management Limited Partnership to assign the Master Lease or any part to any of its partners, joint venturers, affiliates, subsidiaries, successors or related parties, without first obtaining the written approval of the Commission. Insert into any proposed Master Lease with Spectacor Management Limited Partnership
R4

a provision that allows the Commission to audit the books and records of Spectacor Management Limited Partnership relative to the income and expenses from the operation of the Coliseum and the Sports Arena.
R5

Require that Spectacor Management Limited Partnership be fully responsible for maintaining and repairing the Coliseum and any other property occupied under the proposed Master Lease. Include in its Master Lease that the name of the "Los Angeles Memorial Coliseum"
R6

be retained in any name change contemplated.
R7

That the City of Los Angeles and the County of Los Angeles employ an independent auditor to undertake a management study of the operation of the Coliseum Commission. C. RELATIONSHIP BETWEEN THE GREATER LOS ANGELES ZOO ASSOCIATION (GLAZA) AND THE CONCERNED CITY AGENCIES CHARGED WITH ZOO MANAGEMENT
R8

The Department of Recreation and Parks should develop criteria to evaluate concession operations. The Department should regularly monitor concession operations utilizing these criteria. This would provide the foundation for the city to direct improvements consistent with the authority provided in the concession agreement.
R9

The City Council and Mayor review the practice by the Department of Recreation and Parks of receiving advance concession payments from GLAZA. Determine if this practice is in the best interest of the city. If it is continued, ensure that the transactions are readily apparent to the public.
R10

The Department of Recreation and Parks develop a comprehensive zoo management plan to coordinate capital and operating goals and implementation strategies. This should be considered a high priority item for the new director of the zoo. The various committees of the operating agreement could then be assigned specific tasks consistent with the Zoo Director's plan. The Department of Recreation and Parks establish, and provide the appropriate staff for, an on-site zoo Planning Office, as recommended in the draft Los Angeles Zoo Master Plan. This office must be located at the zoo and be responsible for all correspondence and documentation for capital projects. All design and construction activities should be coordinated through this office.
R11

DESTRUCTIVE DEVICES 0 A. BOMBS B. EXPLOSIVES 0 20 19 9 C. FIREWORKS 10 20 1 1 D. BOMB THREATS 14 45 59 3 120 120 117 3 . . DATE 19 SEP 1990 LOS ANGELES UNIFIED SCHOOL DISTRICT SCHOOL PRIMARY CRIME (STATE) SUMMARY REPORT CR-HPT018 FROM 07-01-89 TO 06-30-90 NO. OFFENSES OTHER DAY TOTAL STU HON-STU TIPE CRIME DESCRIPTIONS ELEN JR HS SR HS OTHER TOTAL TIRE DOLLAR
R12

The preceding recommendations (1 through 11) be transmitted to the Mayor, City Council, and Board of Recreation and Parks Commissioners for their consideration and action by the appropriate authorities in the City of Los Angeles. . 17
R13

LOTTERING/TRESPASSING 79 330 345 64 41 127 201 40 409 53
R14

OTHER MISCELLANEOUS CRIMINAL ACTIVITY 1990-91 LOS ANGELES COUNTY GRAND JURY QUESTIONNAIRE--WEAPONS IN SCHOOLS
R75

Development of any kind will be delayed until the city cleans up a hazardous material dump in the middle of the site. The city was unaware of the hazardous material when it began development negotiations. If implementation of two mediation agreements between the city and various community groups regarding Affirmative Action is not accomplished in a timely manner, significant costly litigation against the city could result. The auditors were unable to verify that an individual is monitoring and reporting on progress against the city's affirmative action agreements. The city must strengthen its system of management controls to prevent further problems. The current means by which city management measures, reports and controls performance is inadequate. * Financial reports are not available on a timely basis and do not include key management data, such as trends and comparisons to prior periods. * Monthly department status reports are often a detailed list of tasks accomplished during the month instead of a summary of performance against plans or objectives. * Plans and objectives based on specific, measurable criteria do not exist for most city functions. The City Administrator is currently developing specific plans and objectives for the city departments that report to him. * The Redevelopment Agency lacks a standard procedure to report the progress of projects. * Contracts in the CRA must be more carefully managed: For example, the City Council approved payments for CRA consulting services to a contractor for approximately $244,500 without a written and signed contract. In one agreement for legal services to the CRA, the contract states that hourly rates are subject to revision on an annual basis. In fact, hourly rates for professional services of the firm increased substantially over a five-year period. Yet, the auditors found no evidence that CRA staff knew about the increases in the hourly rates, monitored payments or brought the change in rates or total amount paid to the attention of the City Council. After interviewing a number of law firms, the city appointed a contract law firm to take on the responsibilities of the City Attorney's office and an individual from that firm to be the City Attorney. At the time of hiring, neither the City Attorney nor any member of the firm had any prior experience working as a city attorney. There is no documentation of the City Council's selection criteria, specific performance objectives or mechanism for monitoring performance. Some department procedures which could serve as guidelines to city staff and provide a basis for task execution are either incomplete or only partially implemented. Many departments have policies and procedures manuals (e.g., Fire, Police, Clerk's Office). Other departments are developing policies and procedures (e.g., Finance and Community Development). In Community Redevelopment, a manual of operations was prepared in mid-1989 by a consultant, but it is not used by staff and was never approved by the City Council. * The Building Division of the Community Development Department has not always followed the City Code and other prudent operating procedures in its day-to- day activities. These practices can lead to the appearance of favoritism and can create liability risks for the city and its citizens. Specific examples include: In one of the case files reviewed, the Building Inspector had completed a Notice of Order without properly verifying the name and address of the current property owner by reviewing the assessment records or completing a title search until over two months after mailing the Notice of Order. The Building Inspector was preparing a letter to mail to the property owner stating that a demolition was scheduled. No evidence was found that the case had been reviewed by the City Attorney to determine if the proper procedures had been followed. In one of the case files reviewed where a business license was requested, the Plan Check Supervisor approved an application for a business license with the knowledge that the business did not conform to the Uniform Building Code requirement that such a business have a fire resistive construction. The Plan Check Supervisor stated in a memo that the use did not meet the standard in 1955 and still did not to date. The building had been used for the same purpose for years. The Plan Check Supervisor also stated that he would approve an application for a body and paint shop on the condition that it would be the last tenant allowed on the site with that type of business. The City Council has developed few formal policies to guide city management. The City Council has adopted formal policies for affirmative action and investment management. The City Council does not have a formal policy regarding bidding requirements or evaluation procedures for city or Redevelopment Agency services contracts. * The City Council does not have formal policies or procedures to guide negotiations regarding the sale or lease of city assets. Deadlines, criteria to guide negotiation decisions and financial expectations, if specified, are set on an ad hoc basis. For example, the City Council adopted a resolution to sell a land parcel to a private developer for approximately $620,000 less than its appraised value. The city apparently extended escrow deadlines and is continuing negotiations on the sale. * The City Council does not have a formal policy to solicit input from the Finance Director before making major financial decisions. For example, while the city did obtain the advice of an appraiser and a real estate consultant during the proposed city land sale described above (though such advice is not required by city policy), no one from the Finance Department appears to have been consulted. * The City Council has not ratified policies or procedures for the Redevelopment Agency as follow-up to any of the 1987-88 Grand Jury's recommendations. Responsibility for follow-up and monitoring of compliance with policies, procedures, contracts, agreements, goals and objectives is unclear or nonexistent in many instances. None of the 1987-88 Grand Jury recommendations regarding Redevelopment Agency processes have been implemented. The Agency operates today much as it did three years ago. The City Council in 1988 adopted an Affirmative Action policy statement with assigned responsibilities, but did not put a mechanism in place to monitor compliance. The auditors were unable to verify that an individual is monitoring and reporting on progress against the city's affirmative action agreements. The City Council has not designated an individual to review the Conflict of Interest statements of required filers for potential conflict of interest situations. The personnel evaluation system used in the past for management did not promote individual performance and accountability. The City Administrator is currently working to refine the department head evaluation system to be based more on performance. The system should have been based on performance, but goals and expectations were usually not specified. Goals and objectives were rarely negotiated and documented in writing. The City Administrator is currently developing specific plans and objectives for the city departments that report to him. * Goals that did exist were generally not stated in measurable terms, which made them difficult to use as the basis for performance monitoring. For example, the Police Department's goals included, "delivering service to the community in a realistic, sensitive and positive manner." * Evaluations were not done on a timely basis. One department head had no formal evaluations in nine years on the job. The City Administrator has scheduled performance evaluation sessions with the department heads who report to him to coincide with the end of the fiscal year 1990-91. * Apparently, criteria for evaluations of department heads did not include compliance with council policies and department procedures. Lack of technical experience and vacancies in key staff position have contributed to the city's financial and management control problems. Despite serious concerns about the city's ability to manage and control its assets and resources, key positions have remained vacant for extended periods of time. Until recently, the city had gone four months without a Revenue Manager and almost two years without a City Planner. The newly-hired individuals will find it difficult to learn from the experience of their predecessors due to the lack of documentation. They will have to learn on-the-job about previous problems and will have to develop basic policies and procedures. Vacancies among professional staff in the Redevelopment Agency and the Community Development Department make it difficult for the city to plan, evaluate or administer land management and development activities. Moreover, based on a brief review of the type of cases and decisions facing the city and the Redevelopment Agency, the auditors concluded that staff training is needed in technical skills related to development projects, including economic analysis, redevelopment law, real estate development, real estate financing and project management. The city does not have an internal audit function which could assist in monitoring of compliance with policies, procedures, contracts and agreements. It has no plans or funds available in the current budget to add such a position. The city's planning and economic development efforts are fragmented among various groups. Consistent focus and direction is needed to ensure that limited personnel and financial resources are deployed to meet the most pressing needs. A wide variety of participants directly affect the economic development of the city, including the City Council, City Administrator, Finance Director and Redevelopment Agency Community Development Department staff. In addition, the Pomona Economic Development Corporation (PED Corp), a partially city-funded nonprofit organization, works closely with city staff and the private sector to retain and attract businesses. Nobody, other than the City Administrator, has responsibility for the ongoing coordination of all economic development efforts, including the activities of the CRA, Community Development Department and PED Corp as well as the establishment of city tax rates and City Council policies. There is no comprehensive plan or strategy to ensure that resources are coordinated among these entities to achieve defined goals acceptable to the community. The city does not have any single professional with the technical expertise to manage the economic development function. PRIORITY RECOMMENDATIONS The overall report has 49 recommendations for improvement. Following are those that are the highest priority. Priority is determined primarily by the auditor's estimate of financial and service impact of the recommendation. The Grand Jury recommends that the City Council: Maintain the existing revenue base until a strategy is identified that balances the budget

Conclusions 6

CL1

The city's Zoo Director has the duty and responsibility to control and manage all aspects of the zoo. Weak management and certain provisions in the contracts with GLAZA have hampered the city's ability to fulfill its duty to manage the zoo. Asserting the unity of command provisions of the operating agreement, and selecting a Zoo Director skilled in management and the technical aspects of zoo operations, would address most of the concerns. The city and GLAZA are not in compliance with terms of the operating and
CL2

concession agreements. This is a reflection of poorly written agreements and the city's lack of leadership in administering the contracts. The operating and concession agreements should be amended or rewritten to
CL3

affirm the city's right to direct all zoo operations and to clarify the role of GLAZA as a support group. It appears that both the city and GLAZA are receptive to amending the operating and concession agreements. However, timing for development of amendments and discussions between all those with a stake in zoo operations is not good. The city and GLAZA should hold negotiations in abeyance until the new director of the zoo is selected and in place for a sufficient time to evaluate the situation. A comprehensive zoo management plan could be the basis for an annual program
CL4

and strategy to enable the Zoo Director to lead others in support of the zoo. A comprehensive management plan would identify both operating and capital improvement goals together with implementation strategies. It is likely the zoo would receive more support from GLAZA if the city provided 5, more direction to GLAZA. Following are recommendations to strengthen the city's ability to manage the zoo, to improve administration of contracts with GLAZA, and increase support for the zoo.
CL5

I return to the beginning: the mandate that the grand jury protect the individual against the tyranny of his government, i.e., make a difference. Has the 1990-91 Grand Jury met this criterion? In my judgment, the answer is a resounding "yes." The jury performed well. The jury's work on criminal indictments and criminal investigations and on citizens' complaints had immediate outcomes. The impact of our civil investigations will become evident after a longer period of time. Public policy and government operations do not lend themselves to rapid change. Some of our recommendations will be accepted; others will not. And what more should any rational person expect? Х ARTS AND ENTERTAINMENT COMMITTEE ¥. DOROTHY CHANDLER PAVILION HERBERT KNEETER CHAIR
CL6

П WILLIAM BYRON JACK CUMMINGS JAMES RODRIGUEZ ARTS & ENTERTAINMENT COMMITTEE INTRODUCTION AND SUMMARY The Arts & Entertainment Committee explored the following subjects. Cable Television Companies Survey Α. Fifteen cities within Los Angeles County were surveyed in order to determine the licensing fees paid by cable companies in their respective areas. This is a comparison of basic rates paid by consumers in their communities and comparison of the number of television channels they receive. Los Angeles Memorial Coliseum Commission В. An investigation of their contractual relations with the Los Angeles Raiders Football Team, with the management company they employed to manage the Coliseum and the current negotiations underway to lease the Coliseum to the current management company. Los Angeles Zoo and Greater Los Angeles Zoo Association (GLAZA) C. The committee entered into a contract for a management audit to investigate the relationship between the zoo and GLAZA to determine the extent of their cooperation and their progress toward the enhancement of a viable zoo operation. The committee defined the areas to be covered and supplied documentation to the auditors enabling the fulfillment of this report. A. CABLE COMPANIES SURVEY

Comments 1

CO1

SOCIAL AND HUMAN SERVICES COMMITTEE LEO GOLDBERG SOCIAL & HUMAN SERVICES COMMITTEE INTRODUCTION AND SUMMARY The mission of the Social and Human Services Committee was to analyze conditions and recommend improvements in the services the county delivers to its weakest and least empowered constituents, imperiled children, dysfunctional families, pregnant women in jail, children exposed to drugs in the womb and teenagers from foster care homes trying to adjust themselves to living as independent adults. Specifically, our areas of concern were: Fragmented delivery of services Α. Our report, written by our contract auditor and based on an extensive joint research, is titled "Neighborhod One-Stop Centers for Children at Risk." It explicates the problem and recommends a solution modeled, with relevant modifications, on San Diego's "New Beginnings" project. Interagency collaboration and cooperation among providers for children at risk and В. their families We are proposing prevention models that are working elsewhere and may be applicable to Los Angeles County, a broader definition of children at risk, and the creation of a Children's Planning Board for both the public and private sectors. Giving Birth in Jail: Toward a More Humane Approach C. We believe that the current practice of depriving jailed women of their infants 48 hours after they give birth is inhumane and counterproductive, lessening any chance of rehabilitating the mother while most likely setting the child up for repeating the pattern set by the mother. Our report recommends establishing a nursery, either at Sybil Brand Institute for Women or Mira Loma jail, such as exists in New York and Massachusetts. Education of Substance-Exposed Children D. Such children require special care which they now get with excellent results at a handful of selected schools. Our report commends these current programs and recommends that they be expanded. Ε. Emancipation of Foster Youth Independent living programs implemented by the county éases the transition of 18- year-olds under the supervision of the Juvenile Dependency Court into adulthood and independence. A. NEIGHBORHOOD ONE-STOP CENTERS FOR CHILDREN AT RISK This segment of the Social and Human Services Committee report is a summary of a feasibility study conducted jointly by the committee and our contract auditors, Price Waterhouse. The full study report, written and produced by the auditors, is available on request at the Grand Jury Office.

* This report's PDF did not contain easily extractable text and required Optical Character Recognition (OCR) for analysis. There may be minor errors in the extracted findings and recommendations due to OCR limitations with scanned documents.