LA Controller Galperin Makes Transparent LA City’s "Underutilized" Properties

Your PropertyPanel.LA aims to be a tool, a resource, and a call to action to the city to undertake a more organized, professional, and strategic approach to our valuable shared public assets. In your mind, what triggered the need to do that?

Ron Galperin: I was a real-estate attorney before I became Controller, and I have a brokers’ license. I’ve always been interested in real estate and in the ability that we have to use it to bring tremendous value to the city. This is something that I’ve been wanting to do for a very long time.

The real-estate assets of the city are vast, and they could be delivering a tremendous amount of value to the residents, the businesses, and the taxpayers of LA. It’s long overdue that that happens.

We didn’t do a lengthy report, because those have been done. There have been quite a number of reports in the past about this problem, but nobody had ever actually taken stock of all the properties. I felt that doing so—and putting it in the form of a map, allowing everybody to access it easily—could be a real driver to once and for all address this issue.

The report suggests the creation of a new position: Chief Asset Manager. Elaborate on that notion, and where that manager would be placed.

I think that this is necessary to provide direction on all the aspects of real-estate management—construction, sales, leases, development, joint ventures, etc.

There are several ways the position could be structured, and I think that needs to be discussed by the council and the mayor, with input from lots of different stakeholders in LA. But what’s clear to me is that the General Services Department has not been able to fulfill that role. GSD is focused on building maintenance, for example—not on portfolio management.

I want to see somebody who is not just going to be responsible for doing these things, but who has the authority to do these things. It should be someone with a good amount of private-sector experience, because the mindset it requires is not just about doing RFPs and RFQs. It’s about doing deals.

What would be the review process for assessing highest and best uses of public properties?

Given that we’re a public entity, it’s not necessarily about achieving the best use for a property. A property’s “highest use” might be as a commercial development, but that doesn’t mean that the city should be developing that. We want to continue in the vein of properties that serve the public as everything from parks to community gardens to community centers.

There are other properties that are being underutilized—including vacant lots and other commercial, industrial, and retail properties—where we could look at how to achieve higher and better uses.

Your work in office positioned LA as Government Technology’s top “Digital City” in 2014. You were also named one of their “Top 25 Doers, Dreamers, and Drivers” in 2015 for your belief in transparency and data-driven governance. Give us the context for what drives you in this direction.

Data and transparency, in and of themselves, don’t necessarily create efficiency, but they are necessary prerequisites to greater efficiency and accountability.

I’ll be frank: As controller, I cannot audit absolutely every single expense of the city. I would need a staff of thousands of people to do that. Putting the data out there for everybody to see helps to turn everybody into partners in holding the city accountable. It also helps enlist people to drive an agenda for reform, which is what we need.

There’s always an appetite for more revenue in the city, which drives much of its decision-making. How does one manage a portfolio of public assets not only for today, but also for the next generation, and not be overcome by the need for instant revenue in the process?

I don’t believe in selling, leasing, or joint-venturing property just to close a budget gap in a particular year. We have to meet strict standards about the value that the deal will deliver over the long term. Plus, we want to get input from a lot of different stakeholders about the best thing to do with particular properties.

But here’s the thing: The city owns so many properties that even if we did only a somewhat better job with just some of them, we’d be well ahead of where we are now.

After reading the report, how can our audience give you their ideas and input?

They can email controller.galperin@lacity.org. I will also be frank and say that there is not yet a great mechanism to take in all of the many wonderful ideas that we are already getting and that will continue to come in. Part of the reason that I wanted to do this was to get the city to act to create that better mechanism.

The mayor’s office, for example, is working on an internal management tool to keep track of more information about these properties than the old Excel documents and lists that the city has kept until now.

Below is an excerpt of the accompanying memo:

The City of Los Angeles—on behalf of its residents and taxpayers—owns a vast portfolio of real estate, encompassing nearly 9,000 distinct parcels within the County of Los Angeles alone. These include parks; libraries; municipal facilities; parking lots, and commercial, industrial, retail, office and residential buildings and vacant land.

It is now more vital than ever that the City maximize the value and opportunity of our real property assets. Properties owned by the City serve many community needs and benefits. There are, however, many properties that are underutilized, and which could better serve the public—be it as public space, revenue-producing income property, low-income housing... and much more. Some properties might benefit from being repurposed by the City, while others could generate more value for Angelenos by being leased, sold or developed by the City, or in public/private partnerships.

Accordingly, I today launched a new online site and tool mapping all of the City's properties—along with a call for the City to engage a Chief Asset Manager with public and private-sector real estate expertise to develop a comprehensive strategy to capitalize on, to direct and to manage the City's real estate portfolio.

 PropertyPanel.LA

To improve transparency over asset management, my office has posted the most comprehensive map ever produced of city-owned properties—8,974 within the County of Los Angeles alone. PropertyPanel.LA is intended as an informational tool, as a resource for the City, for community stakeholders and potential investors to achieve a more organized, professional and strategic approach to our valuable shared public assets.

Properties may be searched and filtered by address, Assessor's Parcel Number, Council District or by drawing one's own map. Users can choose from multiple views—including satellite and street views. And, both the maps and the raw data can be downloaded and printed. PropertyPanel.la is also intended to complement the City forthcoming Asset Works platform, which is currently under development.

 Chief Asset Manager

The engagement of a Chief Asset Manager is necessary to provide direction on all aspects of real estate management, construction, sales, leases, development, joint ventures and more. Further a Chief Asset Manager would be charged with developing and executing a strategic master plan for the development, use, and reuse of selected city-owned properties in support of economic development, housing, and various other City initiatives.

There are various models of how a Chief Asset Manager might best function within the City of Los Angeles. Crucially, such a Chief Asset Manager will need real authority and resources. What's clear is that by not investing in the right expertise, the City will continue to lose out on myriad opportunities.

The City's Currently Decentralized Approach

Currently, there is no one party or entity with both the responsibility for, and the authority over, the City's real estate. City Departments (and notably our three Proprietary Departments) exercise varying levels of responsibility and control. The City has a Municipal Facilities Committee made up of representatives of the CAO, the CLA and the Mayor. The CAO conducts numerous property-related inquiries and analysis.

The primary responsibility for real estate in the City, however, rests with the Real Estate Division of the City's General Services Dept. (GSD)—which is charged with providing review, analysis and advice regarding City real estate to the Mayor, City Council, City departments and the general public. Its stated mission is "to ensure optimal use of all Council-controlled City owned vacant and improved properties and maximize the value of each of these assets". The City relies on GSD for acquisitions, appraisals, sales, relocations, leasing, title research, negotiations and property management. G5D has long had an outdated process of updating asset management records referred to as its 'Building Book'. In reviewing the information from the Building Book, my office found it to be incomplete, inadequate, outdated, and in some cases incorrect. Moreover, while GSD has personnel charged with handling the City's real estate, there is, unfortunately, a general dearth of private sector expertise or of any real strategy.

Regrettably, the City's decentralized approach to its real estate has not served us well. And, notably, G5D lacks the staffing and the expertise needed to properly execute its mission. Hence, the need for a truly empowered Chief Asset Manager.

Positive Developments

The Mayor's Office's Operation and Innovation Team, in conjunction with the GAO's office, has been working to develop and implement a centralized asset management system—which will include zoning, use, value, and condition (C.F.15-1521) (C.F.14-1647). The latest budget included a total of $2.4 million in G5D's budget to support this effort. This effort, better known as AssetWorks, will be an important tool for the City family as we move forward. We must make sure, however, that it serves as much more than a better database—but, rather, a catalyst for change.

The Council has also adopted the Asset Management Framework (C.F. 12-1549-53) that outlines a new process for the disposition of properties for economic development. This new framework will expedite and streamline the process once properties are able to be identified. Subsequent to that, the GAO's office has also developed its own property review and evaluation process for use as affordable housing opportunity sites (C.F. 16-0600-S 145).

In addition, in support of the City's homeless strategic plan, the FY 2016-17 Adopted Budget proposed leveraging City-owned land—eight properties worth approximately $47 million—to begin a multi-year effort to increase the availability of permanent supportive and affordable housing (C. F. 15-1138-51).

A Way Forward

It is clear that the City lacks the expertise, accountability and centralized effort to manage and maximize its real estate portfolio. The efforts underway by both the Mayor's Office and the City  Council are important steps to create a more central real estate management system, but what's needed is more central authority and strategy.

Many other jurisdictions have taken the initiative of creating a Chief Asset Manager with very positive results. The Executive Vice President of Real Estate Transactions for the New York City Economic Development Corporation, for example, has executed transformative public-private redevelopment projects on behalf of the City. Successes include the Seward Park Mixed-Use Development and the creation of the Cornell University Tech campus on Roosevelt Island.

Replicating other successful asset management models in Los Angeles will ensure we capitalize on underutilized properties, and help to achieve financial and community benefits for the City and for all Angelenos.