Part of a common site for Neighborhood Councils and Homeowners groups of the San Fernando Valley and information concerning the Valley issues Information about the November 5, 2002 election

Rightsizing Local & Regional Government Methods & Models for Representative Local Governance:
A Compendium

Produced by: Reason Foundation/Public Policy Institute, James Irvine Foundation, Valley Civic Foundation, Economic Alliance of the San Fernando Valley and CivicCenter Group

Index

Remarks By Bob Scott  Economic Alliance Executive Vice Chair Speakers
Remarks by Sam Staley Director Urban Futures Program Reason Public Policy Institute
Remarks by Joel Kotkin Research Fellow In Urban Studies, Reason Public Policy Institute, Amd Senior Fellow - Davenport Institute For Public Policy, Pepperdine University 
Remarks by Ron Oakerson Dean/Professor Of Political Science, Houghton College
Question and answers

Comments by Robert Poole Director Of Transportation Studies, Reason Public Policy Institute
Comments by Andrew Sancton Chair Department Of Political Science University Of Western Ontario
Remarks by Milan Dluhy Chair, Department Of Political Science-Public Administration, University Of North Carolina, Wilmington 
Remarks by James Nolan Transportation Chair Department Of Agricultural Economics, University Of Saskatchewan

Question and answers
Remarks by Larry Calemine Executive Director LAFCO
Remarks By Joe Shea Candidate for LA Mayor

The afternoon section is not yet completed

Preface

This report was underwritten, by the Economic Alliance Of The San Fernando Valley

In The County Of Los Angeles Universal City, California Sheraton Universal Hotel

In The Matter Of Symposium On Rightsizing Local And Regional Government

Reporter's Transcript Of Proceedings Monday, February 5, 2001

Appearances: Economic Alliance: Bruce Ackerman, President 

David W. Fleming, Chairman 

Lynn Scarlett, President Reason Foundation 

Jeremy Smith, Director, Local Government International Bureau, London, & Former Chief Executive London Borough Of Camden 

Edward A. Schwartz, President Institute For The Study Of Civic Values 

Douglas P. Munro, President Intergroup Services, Baltimore 

Robert H. Nelson, Professor, School Of Public Affairs, University Of Maryland, And Senior Fellow, Competitive Enterprise Institute 

Shirley Svorny, Professor Of Economics, California State University, Northridge 

Sam Olivito, Executive Director California Contract Cities Assoc.

Nicholas T. Conway, Executive Director, San Gabriel Valley Council Of Governments

Mr. Ackerman: good morning.

I ask everyone to take your seat. We would like to get started.

once again, good morning, and welcome to San Fernando valley. On behalf of the economic alliance of the San Fernando valley, I would like to welcome all of you here this morning.

Just some very quick, brief announcements before we get started. We have got an absolutely jam-packed day prepared for you, and we don't want to waste any time not getting Into that.

If I can have you refer to your packets, In your packets -- when you came In you picked up a white packet with the economic alliance logo on It -- that has the agenda, It has the biographies for each of our panelists and speakers today. We will not do lengthy Introductions. You already have that Information In those packets.

Also, you were handed a copy of Ron Oakerson's book. We have 100 of those books here. The other 50 are being shipped out, and hopefully they will be here before the end of the day. So those of you who did not get one of Oakerson's books, you will get one before we go.

just a brief overview of the format for today. we have four different panel presentations plus our keynote speaker.

At the end of each panel presentation, we will take about ten to 15 minutes for questions and answers. Bob Scott, who we will meet shortly, will be roaming around the room picking up questions that you will pre-write out so that you can ask the questions of the panels.

So make sure you have three-by-five Index cards on each table, write out your questions as the panel has finished their presentation, and then we will ask the questions from your table place.

have you got that right? okay.

I am  president and chief executive officer of the economic alliance. Let me please Introduce one of our cosponsors today, Lynn Scarlett, president of the reason foundation. Lynn.

MS. Scarlett: thank you. I am delighted to be here and to have reason foundation, reason public policy Institute, cosponsor this event.

I thought I would start and keep you on your toes by referring to a quote by Aristotle. Aristotle once said that men come together In cities to live, but they remain there to live the good life.

The good life, of course, as we all know, In cities requires basic services, It requires the seemingly boring but essential trash collection, street lighting, cleaning of streets; It also requires, but much more elusively, a sense of place; and finally, and probably equally elusively, It requires governance.

Urban historian peter hall opined that cities always require collective action. He goes on to say that that doesn't necessarily mean public action. Often collective action consists of giving wide powers to private agencies.

But this of course raises central questions, questions that you will be hearing discussed today:  what forms of collective action?  What decision-making unit? A neighborhood? A small city? A metropolis? Or still larger regions? 

This conference Is going to explore these and other questions. What Is a city, for example? What Is a municipality? As cities grow, how can representation and governing Institutions be maintained? how do cities fit within the larger regions within which they reside? How can services be provided that ensure both accountability but also coherence across jurisdictional boundaries? What are the respective roles and opportunities for public and private action? I am going to leave you with those questions and hope that today's speakers enlighten you on them and that there Is great discourse In conversation on some of these challenging questions, questions of course that specifically apply to San Fernando valley and the greater Los Angeles region.

I want to say a special thank-you to Sam Staley from reason public policy Institute who worked many hours helping to put this program together and also to the many, many folks at the economic alliance who also made this event possible.

thank you.  To index

Remarks By Bob Scott

Next I would like to present the chairman of the rightsizing local and regional government symposium, who Is also the executive vice-chairman of the economic alliance and the founder of the economic alliance, bob Scott.

Mr. Scott: I think It should have been "a founder," not "the founder." thank you very much. I will be trying to help lubricate the activities today. I have a wireless mic out here you all have some Index cards on your table.

As we go through this process, we would like to make It so It's a little more fluid, a little bit more give and take. So If you develop questions as you go along, If you mark down the name of the person the question Is for and give It to me, we will be able to Interpose these questions In a timely manner.

Unfortunately, we have the shades down here, so It sort of spoils what I was going to say. But I was going to mention the fact that we have the Los Angeles basin to the south, we have the San Fernando valley to the north, and we have the Santa Monica mountains, which has been a matter of some great discussion with respect to at least the landmarks of the San Fernando valley, off to our west and right out here through these shades Is, of course, Burbank, Glendale, and some of the other cities that make up the other portions of the San Fernando valley.

Down at the bottom of the hill here we have the terminus, If you will, the terminus of the metro rail subway system which of course was at least 20 years ago anticipated to extend Its way on out to Warner center and to the northeast valley.

In any event, you also have a green sheet In your packet there. It's an evaluation sheet. This Is extremely Important to us. I again would like to thank the sponsors of this event: the valley civic foundation, the James Irvine foundation, the reason public policy Institute, and of course the economic alliance of the San Fernando valley.

And there Is one person without whom I don't think much of this would be as far along as It Is today, and brought a sense of, I think, Importance and security and drive to this organization, and that Is my good friend and the chairman of not only laedc, the economic alliance of San Fernando valley, Mr. David Fleming.

Mr. Fleming: thanks, bob. And good morning, ladies and gentlemen. Welcome on behalf of the economic alliance and the civic foundation. We are pleased to have you all join us today.

We have convened this symposium with two fundamental principles In mind. These are the principles: first, regional problems demand regional solutions. And regional problems come about primarily through regional empowerment.

Four months ago California assembly speaker bob Hertzberg created a state commission on regionalism. Some of those commissioners are here this morning, and throughout the day we are going to be discussing regional empowerment. Incidentally, on the table out there Is a list of everyone who serves California, served on that commission.

We are starting out, we have a big job to do. It Is going to go for about a year; and, by the end of that time, we hope to make some real progress because regional problems are not easily solved. They affect the quality of everyone's life In California, from airports to transportation to waste to water. They require Intelligent and equitable solutions.

The second principle guiding us today and one which has been driven by the current movements for secession or Independent cityhood, whichever you want to call It, those efforts In Los Angeles, the second principle Is this: the smaller local governments become and the closer they get to their citizens they serve, the more engaged the citizens become with both their government and their communities.

Empowerment of communities begets citizens' Involvement In those communities. And citizens' Involvement In those communities begets citizens' ownership of community problems.

You can't solve a problem without taking ownership of It. This then becomes the future key to successful community problem solving. Again, It Is empowerment, meaning Involvement and Involvement meaning ownership.

If we feel pride and connectivity with city government at Its most localized level, we tend to exert Individual responsibility over our Immediate environment as well as the well-being of our neighbors and our neighborhoods.

Conversely, If we feel disconnected from city government, helpless to Influence It, Ignored by It, Irrelevant In our government's daily comings and goings, we tend to tune out.

In tuning out, citizens decline taking ownership of local problems. Feeling disconnected with giant city government, they become ambivalent toward It. Most remain aloof, except occasionally they show up at the polls solely to defeat a bond Initiative or some other measure which could raise their taxes or cost them money.

That Is one reason why L.A. voter turn-outs have been trending downward In Los Angeles over the last several years.

Wwe see today areas of L.A. stagnating or even deteriorating. Surveys show that people fear for their safety. Repairs -- If done It all -- seem to take forever In this town.

These are long-term symptoms of a city In trouble. On the other hand, we see smaller cities around us thriving with safe streets, clean parks, well kept lawns, trees, sidewalks, and streets. We see the pride these citizens have In their cities, delivering better services at lower costs.

 And we In Los Angeles say, "why not us?" we brought some distinguished people here today from all over the united states and abroad to help us broaden our horizons, open our minds, give us some hope that Los Angeles can, through real restructuring, become a better place to live.

Times change. And governments must also change. Despite their recently enacted charter reforms, the structure of Los Angeles government has just not kept pace with the city's exploding growth, Its ever changing ethnic mix, and our new world of technology through the Internet.

Ask yourself this: Is the 1926 framework of L.A. city government still working today? the only major difference In 75 years Is the size of the bureaucracy. In 1926 It was a few hundred. Today It Is 40,000. It has grown by a factor of 5,000 percent. But the overall framework Is still the same.

Seventy-five years ago there were 16 people, a mayor, and 15 council members governing Los Angeles from downtown, the only downtown we had then. That Is where almost everyone worked If they had a job.

Seventy-five years ago L.A. ‘spopulation was 300,000. Seventy percent of the land contained In the city's boundaries was occupied. Only 30 percent was urbanized.

Seventy-five years ago almost all of L.A. ‘spopulation was white, primarily transplants from the midwest and east. The only language ever spoken here regularly was english.

Take away the palm trees, and we look like a mid-sized midwestern or eastern city, the same mores and the same manners.

That was 75 years ago. Now look at Los Angeles today. We have a population of four million, not 300,000. We are a vast, sprawling urban mass stretching over half a thousand square miles with almost no open space left. We are probably the most ethnically diverse city In the world. Every day In our homes and shops and restaurants and stores there are over a hundred languages spoken right here In this city.

Yet despite these enormous changes, we still have 16 people trying as best they can to govern us, still from just one location, 200 north spring street, city hall.

That Is 30 miles removed for those living In the city's outskirts, and, for us In the valley, the whole mountain range away.

I had hoped the charter reform would have addressed these glaring deficiencies and help catapult Los Angeles Into the 21st century. Unfortunately, It did not.

So today we have areas of the city containing over half of L.A.‘s population seeking to detach from Los Angeles and form smaller cities. Why? Well, the experts here today will be addressing the root causes underlying Independent cityhood or secession and what Los Angeles must do If It Is going to stay together as one city.

The other morning I glanced out of my office window on the 25th floor of the universal towers, the building 2 next door, It was about 8:30 In the morning. I noticed down on Ventura boulevard that workmen had brought In some heavy equipment and set up on both sides of the street. They put cones In the street which blocked two of three eastbound lanes as well as two of three westbound lanes. One set of workers worked for a private contractor pursuant to a permit Issued by the city of Los Angeles. The workers on the other side of the street were personnel from one of the city owned utilities.

the traffic, particularly the eastbound traffic, was very heavy, as It always Is that time of morning. And since these cars had to merge from three lanes down to one, the traffic buildup stretched out bumper to bumper for miles on Ventura boulevard as far as the eye could see.

I watched this for about five minutes. The workmen themselves were oblivious to what was happening. They just kept going about their work as though they were the only people In the world, didn't care about what was going around them.

It seemed to take forever for those cars, one by one In rush hour, to crawl past the construction blockage on both sides of Ventura.

I noted later that all the construction had finished by noon. The cones and the workers were gone. And I wondered to myself: why didn't the city of Los Angeles order that work to be started later In the morning, say ten o'clock, after the morning rush hour traffic had subsided? well, the answer, of course, Is that few In city hall either knew or cared. After all, that tie-up was 12 miles away from spring street In a city so big, so vast, very likely scores of tie-ups like that exist every day.

But the one effect, It did not affect city employees trying to get to work downtown. If It had been two blocks from city hall, you bet they would have heard about It. It was 12 miles away, so It wasn't their problem. And the very fact that It wasn't their problem Is the problem.

Now let's Imagine a new scenario. Let's Imagine this, that a unit of localized government called a borough had been created, we'll call It the universal studio city borough of the city of Los Angeles. And let's suppose that the borough's elected board made up of borough residents had been empowered to regulate the hours for construction work on the major thoroughfares In that borough. Do you think that tie-up would have happened? Of course not. That Is what local government Is all about.

It's people who care because they are there. They live there. They work there. They own there. It's their community.

Russian dictator Joseph Stalin once remarked that the death of one person Is a tragedy but the death of a million Is a statistic.

Most of the four million people living In Los Angeles today perceive themselves as little more than statistics In the eyes of the thousands of L.A. city bureaucrats. Is It any wonder that Independent cityhood movements have sprung up? we could fit the cities of San Francisco, Minneapolis, Boston, St.. Louis, and even Manhattan Island all together In the area covered by L.A. ‘smunicipal boundaries all at the same time and still have room left over.

Is It any wonder then that four million LA city residents tend to feel disconnected from their government? I mean, after all, what Is local about city hall making decisions on matters pertaining exclusively to, say, Chatsworth, 30 miles and a mountain range away? Is It any wonder that millions of Angelinos stay home each spring when city elections roll around? Who cares who wins or loses? They feel powerless anyway. They are only a statistic.

And who downtown at city hall could really be expected to be compassionate about a statistic? Four million Angelinos, together with 100 communities they have lived In, have become victims of destruction of government. They are victimized by the entrenched egos, by the turf wars, by the Insatiable appetites of this city's powerful bureaucracies, whose only goal Is to first retain political power and, second, to acquire more of It.

Look at charter reform. Those at 200 north spring street fought to the bitter end to avoid even giving up a scintilla of power, and the only power we are talking about was to share power among themselves between the mayor and the council.

It's been political heresy so far to suggest that city hall part with any of Its power or devolve It down to local communities to decide local Issues. We will see what happens.

but wait, now, wait. We are told that neighborhood councils are coming, that they will solve all of the Imagined problems of local disconnects. But the, quote, advisory, unquote, neighborhood councils have offered the citizens no more than a placebo.

You know what a placebo Is. It's when a pharmaceutical product Is tested and they have blinds, and they give one set of people the real thing that they are testing and the other set coated sugar pills -- they are called placebos -- and they decide what differences there are among the two groups.

Well, that Is what these advisory neighborhood councils are Is a placebo, a sugar pill, the political equivalent of smoke and mirrors. They attempt to create the Illusion that the giving of advice Is the equivalent to empowerment. It Is not.

The right to advise was guaranteed 200 years ago In our bill of rights. It Is called freedom of speech. I am not aware we need advisory city councils to exercise freedom of speech to tell elected officials what we like or don't like and what we want or don't want. Chambers of commerce, homeowner associations, citizens groups do that every day.

So why do we need a whole new costly bureaucracy of advisory neighborhood councils to do what we have been doing for years? even California's state librarian/historian Kevin Starr, one of the staunchest foes of breaking up the city of Los Angeles, has finally come aboard the borough bandwagon. He understands what we will be discussing today.

He has now championed the need for reconnectivity between citizens and their city government because he knows that only by breaking down L.A. city government can It avoid breaking up.

Today we will explore how local and regional governments outside of Los Angeles work. We are going to focus on what cities even larger than the city state of Los Angeles -- London, for example -- what they have done and what works and what doesn't work, the results they have achieved, the citizen benefits they have created.

We are going to talk about new units of local empowerment, whether we call them boroughs or districts or villages or towns or communities, or whatever.

We are going to talk about devolving power as well as the Incentives to use that power judiciously. We are going to talk about nimbyism, the staph Infection of local evolution, the antidotes to prevent and cure nimbyism. We want to address these matters today with open and Inquiring minds.

We are going to openly entertain questions, we are going to debate Issues. After all, this Is a symposium, a coming together of minds and Ideas. and after having dinner with some of the speakers last night, I can tell you this Is the greatest collection of minds on this subject, I think, that has ever been put together. We are very fortunate.

Los Angeles faces a new paradigm. And the new paradigms sometimes are difficult to adjust to and accept; we understand that. Let's hope that reason and good sense can prevail and that the end goal will be to do what Is In the best Interest of the common good for everyone.

You know, Los Angeles can be and should be a world class city with a quality of life even better than any other city In the world. Considering our climate and, just looking around today, It Is absolutely beautiful. I think anybody In the world would want to live here.

but, as we will see today, It Is going to take a lot of hard work and a lot of citizen Involvement to get us there.

thank you very much. To index

Remarks by Sam Staley

Mr. Ackerman: to begin, I want to Introduce a gentleman that I have had the privilege of meeting, Sam Staley of the reason foundation. He and bob Scott worked very hard to put this whole program together. and Sam Is going to come up and take care of the first panel. so, Sam, welcome.

Mr. Scott: write the questions down on those Index cards, and as we get toward the end of the panel, we will come around and pick those up. To index

Remarks by Joel Kotkin

Mr. Staley: Joel Kotkin, If you can come up. He will be our first speaker. as we mentioned earlier, the bios are In your folders. I am not going to talk a lot about Joel. Most of you are familiar with Joel's work anyway.

What you may not be familiar with Is work he has been doing with reason public policy Institute where he has been focusing on reconceptualizing the cities, particularly older areas and what he has termed midopolis, which we talk about today.

Also, In the context of technology, I would urge you -- he has a new book out called "the new geography." I'm going to plug It, even though he didn't ask me to, because this really does talk about some of the trends that are shaping cities and making them viable. And I think that has Incredibly Important In locations for governance, which Is really the second half of this panel. so Joel.

Mr. Kotkin: I am going to just go through this pretty quickly. We won't have the maximum amount of time for everyone to participate.

It Is very exciting for me to be Involved In this because besides the fact that It Is an Intellectually Interesting phenomena to live In the San Fernando valley and own a home here, talking about something that Is very dear to heart, but It Is extremely Important that we start with the preface that what Is going on here Is unique but also not unique and that what we are really talking about Is a phenomena that Is happening as cities get larger and as technology has been pushing Industry further out Into the periphery and how It has really changed the nature of what the San Fernando valley Is.

you know, David was talking about the changes In Los Angeles. Let's talk about the changes In the San Fernando valley.

San Fernando valley 75 years ago, of course, was pretty empty. Even 40, 50 years ago It was the fringe of the city.

today the San Fernando valley Is not the fringe of Los Angeles. The San Fernando valley Is something that lies between an expanding periphery, Westlake village, antelope valley on one side, of course as you go to the south towards orange county, vastly expanding urban region. It Is really between that and the traditional core.

so I was trying to figure out what this was, because I have written a lot about the periphery. In the book I refer to them as nerdistans, which are areas where high tech people go to places that nerds like.

and that has really been where the growth has taken place. If you look at the projections over the next 10 to 20 years, San Fernando valley and communities like It are not expected to grow that much In population, actually hardly at all, compared to their historic levels of growth back In the '50s, '60s, and '70s.

so we have to understand, although this Is not a downtown urban core, It Is also not a suburb like the suburbs to the north, for Instance, on the 101 corridor or Newhall. The demographics are different and the economic situation Is different.

so If we could have the first slide and all the different little points here.

I call this a midopolis, which Is something that lies In the middle. These are middle places. It Is no longer suburbia.

you know, the old sort of valley girl Image of the San Fernando valley Is so Inadequate today, It makes absolutely no sense because the valley Is really something very different than what It once was. It Is no longer the suburb of the city In that, a, that valley residents overwhelmingly work In the city of Los Angeles, that they don't, and second of all, that this Is the place that exists as an adjunct, as a bedroom to Los Angeles. It Is really something quite different.

these are older suburbs. The San Fernando valley, like many of us, Is going Into middle age. It Is now 0, 50 years old. The house that I own Is almost 70 years old.

these neighborhoods are now going through the very traditional urban pattern of, In some cases, decaying, In some cases getting better, some cases getting worse. But very much like urban neighborhoods, Sherman oaks, studio city, Toluca lake are not suburban communities any more In the sense of being the periphery of the city. They are urban neighborhoods with their own histories and their own ability 9 to go up and down, which Is why this Is so Important.

when David was making the point about the Burbank experience -- and we'll get back to that a little bit -- or the Glendale experience, these are really the experience of smaller cities competing with essentially a city that doesn't exist yet called the L.A. part of the San Fernando valley.

what type of areas would you say are similar to this? Where I grew up on long Island, New York, an older suburb, Nassau county now has been really built out for 30 or years. There are now other suburbs further out. It Is an older suburb, San Fernando valley, and oddly enough the silicon valley, Santa Clara, Is an older suburb.

most of these areas had their big expansions In the '50s, '60s, '70s. They are In a different stage of development now.

and we really, In doing the research with Sam, one of the things that I think we found Is we are essentially defining something In which there was virtually no research because older suburbs have, for the most part, not been researched, and the research, as we will discuss that has been done so far, has been pretty tainted.

can we have the next slide.

what originally happened with these areas Is they started off as residential. There was a lot of tract housing In the '50s and '60s, high levels of commuting. They were automotively oriented.

although L.A. did start with some streetcar 0 suburbs, fundamentally these were spread-out cities, so they were not cities like traditional cities. But people get this Idea that If a city does not look like Chicago or New York or Boston, It Is not a city. The reality Is the midopolis, the older suburbs, are becoming a new kind of city, and people have not really come to grips with this.

If we go to the next slide, we can see that suburbanization has continued to grow and grow quite rapidly and has grown faster than the city.

so the economic growth has been fundamentally suburban, but now It Is distributed between two types of suburb: the midopolis, the older suburb, and one you might call the nerdistan or the peripheral suburb.

If we go to the next slide.

the trend has been to lower density suburbs.

we are going to talk a little bit, I am sure In this discussion, about new urbanism. The problem with new urbanism, which Is a theory which basically says we should all be living In crowded apartments around subway stops and basically thinks that the Ideal way to live Is the way that people live In the central parts of London or New York city, and those of us who came to California because we want a little bit more space really are on the wrong track.

The fact of the matter Is the market Is telling us that basically most people, particularly families, want space. If you have got a young kid, as I do, you know that having that backyard Is a big plus. And no matter what the social engineers try to do, people are going to continue to want to do that, at least most people who have families.

And that Is one of the great appeals the San Fernando valley still has. It Is In an urban area. It has the kind of vitality and diversity that we will talk about that Is exciting, but you can still own a home, have a pool In the back yard, have a barbecue, have that little bit of autonomy which I think Is an Inherent part of the American character.

If we go to the next slide.

There have been some significant changes that have changed this old suburb, If you will, the valley girl suburb of the 1970s even, Into the new kind of midopolis, a more sophisticated and complex reality that we have now Is one growing ethnic diversity.

I remember In the old days In the San Fernando valley you basically didn't really see a lot of ethnic diversity the way you do now. You go to Van Nuys, Sherman oaks park, you will hear arabic, you will hear Armenian, you will hear Spanish, you will hear Hebrew, you will hear five, six, seven languages, occasionally English too. And what you are finding Is the valley Is now becoming, and other older suburbs are going through the same thing, are becoming very, very, diverse places. Some of the best ethnic food, some of the nicest ethnic markets are now In the valley.

The valley Is now more heavily Asian than the non-valley parts of L.A. and becoming Increasingly Asian.

The Hispanic population of the valley Is very large. We will get Into that subject In a little bit.

What’s Interesting Is when people make the argument the valley Is seceding to get away from, quotes, people of color, well, they must have a pretty weird sense of what people of color are because those are their neighbors.

The valley Is not -- like when I go out sometimes to places like Newhall, I was commenting, "now I know where all the white people went." the valley Isn't that any more. The valley Is a very diverse place and getting more diverse.

The other thing that Is changing the reality of midopolis, and particularly In the valley, Is a shift to the periphery of -- particularly of the high tech Industries to places such as Westlake, thousand oaks.

When we think about the suburbs, traditionally we think about the suburb, there Is the city, the suburb Is next to It.

Now you have to make another level. There Is another ring beyond the traditional suburb, and that Is a reality that Is shaping what Is happening here.

In many cases those areas are more expensive, for Instance, than to buy a home In than the areas of the San Fernando valley. They are definitely an option.

Any business that Is here always has the option of going to Westlake and thousand oaks. I can tell you I spoke to the Newhall land company last week, and they say the vast majority of the businesses moving there are coming right out of the San Fernando valley.

Part of the problem Is, of course, the 3 Infrastructure. So all these Issues of governance become more Important because essentially as an older suburb, as a place with aging Infrastructure, the option of going downhill Is right In front of us.

Actually, I quote bob Scott In the new geography on exactly this. The valley could become a great place, a new model, a new way of life that offers opportunities for all sorts of people, or It could decline.

In many European countries the older suburbs have become slums and some places In the united states as well.

Going to the next slide.

I want to make this point about the diversity of the valley. What Is happening clearly Is minority populations are moving to the valley and to other suburbs. So we are not just talking about something that Is unique because L.A. Is such a diverse city, although It Is; this Is happening everywhere.

Actually, In most sunbelt cities what we found Is that most of the ethnic growth, Latino and particularly Asian ethnic growth, Is going directly Into the suburbs. It Is not In downtown Houston that you find the Asian population. It Is In the sort of older suburbs where you see It. Same thing Is true In Dallas. Same thing Is true In Atlanta. In the case of Atlanta, most of them aren't even In Fulton county, which Is where the city of Atlanta Is.

So what we are seeing Is the suburbs are the place where everyone Is going. Why are they going there? For the same reasons everyone else went there. People want to own 4 a home, maybe they think It's a little safer, the schools may be a little bit better, and Increasingly the economic activity Is even located In the older suburbs or out In the periphery, and It Is much easier to get there.

If you get to the next one.

Again, the San Fernando valley, we can see this dramatic change In the diversity of San Fernando valley.

You know, one of the Interesting things I saw In the L.A. times, there was an article about the election, the mayoral election. There Is a mayoral election? Yes. Not that much Is being written about It or people paying too much attention, but they were making the comparison that the old forty voters were now going to be -- are In the valley, and they are going to vote for the more conservative candidate.

I hate to tell you, the forty voters have either moved, they have gone to other places In the west, or they have died.

The reality Is 70 percent of the San Fernando valley voted for al gore. So the Idea that this vast, old, conservative suburban voter Is the predominant person In San Fernando valley Is simply wrong, It just Isn't what Is happening.

And the valley Is becoming a place where there are large populations of Latinos and Asians. We already have seen Latino political power, and a city of the San Fernando valley would be a city with significant Latino power. And ultimately many of the boroughs, If you broke It up Into boroughs, several of the boroughs of the San Fernando valley 5 would be themselves overwhelmingly minority.

So this whole Idea that this Is white flight Is just wrong. The white flight Is taking place out there, out towards the 101 corridor, Newhall. That's where white flight people that don't like the city, that's where they are going.

You go to Westlake village, you go to thousand oaks, they look at the San Fernando valley as the city.

Sometimes when I have to spend a lot of time there, when I go out there, I suppose you know they are sort of surprised that I'm not a cholo or something because I came from the San Fernando valley. So the reality Is the valley Is changing, the older suburbs are changing.

If we go to the next slide.

What Is happening now Is there are a group of people coming out there, new urbanists, some of them call themselves regionalists, and what they are saying Is what has happened to the Inner city Is now happening or beginning to happen In the suburbs.

Mike Davis was one of the great heroes of the Intellectual elites of Los Angeles and Is still, unfortunately, considered to be the great Interpreter of LA, says many of the aging suburbs are trapped In the same downward spiral from garden city to crab grass slum, and It talks about basically the destruction of suburbia.

so what there Is a new kind of Intellectual argument out there which Is basically saying that older suburbs are Inevitably going to decline. They are going to become just like the older cities.

now, the Interesting thing about this, as we get Into It, Is two things are wrong. One, In many cases, though not so much In LA, many of the Inner cities are coming back. And there Is a reason report which documents that.

but the second thing that's really Interesting to me Is that I don't think the older suburbs are declining.

I think that some of them are, some of them aren't, and you certainly can't say the story Is over.

If you go to the next slide.

what are these people saying? The solution Is regional government. Part of their Idea Is let's allocate tax dollars away from the favored quarter, the so-called rich suburbs, to the poorer ones and to have this regional government -- to some extent they are even saying we are going to have -- from the top, we are going to dictate what your community should look like.

what Is really happening Is the sort of victimization of the Inner suburbs Is now being used as a reason for saying let's now put the Inner suburbs under government control, higher up.

what Is really funny Is, I love this rhetoric because I always say we want to make sure for a more democratic solution. But the democratic solution Is always to let the architects and planners Impose It from further and further away.

I guess the ultimate democracy would be the one, I guess, that Joseph Stalin would have liked, sort of a 7 one-man democracy, you know, "I am the person who decides what happens." this Is becoming very powerful Inside the policy world. This point of view has gotten enormous currency In the media, and you are going to hear more and more about It.

the only way to save the older suburbs Is to have a regional solution. The political strategy Is we are going to link the older suburbs with the Inner city and create a redistribution model that will solve all the problems. Now, the one big problem with all this Is that It Is not true.

and If we go to the next one.

the reality Is that many of the Inner suburbs are thriving. If you go to parts, for Instance, of the San Fernando valley -- studio city, Sherman oaks, Toluca lake are three communities that I can think of -- then you can go to Burbank, which Is an older suburb, what you would find Is these communities are thriving. They are not dying the way the critics say.

we have to look, If you take the next map, at what Is happening with property assessments. What we are finding Is that there has been rapid property appreciation In the last five years In many of the older suburbs. And so the Idea that the older suburbs like the San Fernando valley are Inevitably going to decline Is just Inaccurate, It Is wrong, It Is off target, and It doesn't get to the problem.

the real problem Is you have to drill down a little bit lower.

next one, please.

what you find out Is that some communities are 8 doing well and some aren't.

sometimes a community has an advantage. It has a nicer housing stock. It has got a nicer physical location.

In many many cases they have got a nicer downtown or shopping area that was easier to recover.

But as I have studied this around the country, what I have found Is the real difference Is usually the nature of the local community and the ability of the local community to do the work that Is necessary to be done.

David mentioned Burbank or the smaller cities around here. You drive along any of the boulevards going from the San Fernando valley Into Burbank, and you know when you are In Burbank. There Is economic activity, It Is cleaner, things are In better condition.

let's face It. Burbank Isn't any prettier than the surrounding parts of the San Fernando valley. The housing stock Isn't nicer. And, of course, remember "beautiful downtown Burbank"? I mean, really, It was a joke at one time. Now It Is actually a really nice downtown.

that wasn't done because some regional government decided to make It happen. It happened because the people of Burbank and their government got together and the businesses there and said, "we are going to make a better community." and It Is not unique to Burbank. It Is places like downers grove, Illinois, which has done the same thing.

the key factor here, as we will get to the end here, Is that these are small cohesive cities where you can run for city council without being owned by the public employees' unions or the big developers. You can draw as an Independent, you can meet your neighbors, you can have back-and-forth.

In some areas ethnic group-led resurgence: Hempstead, long Island, near where I grew up, which was going for years now has a Salvadorian population In particular, Jamaican population moving In, really helping to revive that area.

the San Gabriel valley, basically the new Taiwan, as some people call It, tremendous economic growth, again driven by ethnic movement Into suburbia.

and even the city of San Fernando , which Is a working class Latino area, but It's doing so much better than the surrounding parts of Los Angeles.

the other factor, just on a strategic level, Is sprawl doesn't necessarily work against the Inner city. But It certainly doesn't work against the midopolis because the key thing Is as business was further out, the midopolis, the older suburb, becomes more strategically the center.

the real center of the L.A. economy Is not downtown, It Is places like the San Fernando valley, because, first of all, San Fernando valley has more growing companies, more fortune 500 companies than the central part of the city does. And It also has the advantages for, let's say, a working couple; one person can be working at Disney or working In one of the businesses here In the San Fernando valley, the other one can be working out In thousand oaks where jobs are 0 being created and they are relatively convenient.

so essentially sprawl actually makes the older suburbs more strategically valuable.

can we have the next one.

we see this, If we take a look at some of this -- going faster than I can read. But basically what you are seeing Is that when we looked at the real estate trends, the office trends, that there Is still strong demand In these midopolis areas.

so again If you were going to say that this area was declining, then how would you explain rising property values? How would you explain the demand for homes? How would you explain the tremendously low rates of vacancies for housing? none of those things would be true In a declining area. Yet people say well, yes, there are places -- If you go to the next slide, you can see that there are places that are not doing well. But It Is a more balanced picture.

you have areas that are not doing well, places like Arleta, for Instance, where there Is a great deal of poverty. But the reality Is It Is a mixed spectrum, just like any other community.

so the question becomes not Is the older suburb all going to decline, Is It Inevitable, Is there some Inexorable decline that Is going to take place? No. It Is about what the quality of government Is.

so If we to go the last slide: what do I think we need to do about It? From looking at this again, not just In L.A. but In lots In other communities, In Chicago area and other areas, Is first of all this Is what I think the older suburbs need to do: one, I think there are some things to take advantage of. One, antigrowth sentiment In the nerdistans, the outer suburbs, Is now pretty extreme. It Is very difficult to build In Valencia and thousand oaks. The price of development Is going up In those areas.

there Is an advantage there, plus new Infrastructure Is very expensive. This area has an established Infrastructure. Housing costs, the Canejo Valley housing costs could be 50 to $100,000 higher for the same quality of house. That Is the advantage for the valley.

I think wherever possible the older suburbs have to give up the Idea that they are just going to be -- you can't out-shopping-mall thousand oaks. But what you can do Is take advantage of those little places In the valley where there Is a sort of more traditional sort of downtown shopping kind of area.

studio city, Sherman oaks are two great examples of what can be done. Downtown Burbank. People In the valley would like to have that kind of environment. It Is something that you can't find In the outer suburbs, and It Is something we should work on.

and finally, how do you do all this? The key thing Is to bring government to the local level, just to get back to the main point. I think the older suburbs can come back. Some of them are coming back.

and the question of where they go long-term Is really a question of governance. If governance Is done by the people that are local, by people who understand their areas and can customize what needs to be done for the needs of those areas, I think the prospects for places like San Fernando valley could be tremendous.

but If we continue to allow decisions to be made at city hall or, even worse, by some huge regional agency, then I think these areas will fulfill the prophesies of the new urbanists, the regionalists and go Into long-term decline.

and, as a resident of the San Fernando valley, I don't want to see that happen, and I don't think you do either.

thank you. To index

Mr. Scott: write down your questions for Joel.

and then at the end, we will take questions for both of those.

Mr. Staley: Joel mentioned that he Is currently writing a study for reason public policy Institute on what Is happening to these metropolitan places, the new lexicon of urban development. And there Is a draft of that that Is back on one of the tables. We are going to have some more copies coming as well. Feel free to pick It Is up, but It Is a draft.

and also I should mention that the way these panels are structured, they really do build on each other. So I think -- and what we are trying to do here In this first panel Is really lay some groundwork, both empirically as well as conceptually.

3 the next panel Is really going to be Involved In some nuts and bolts Issues.

really, I think the luncheon talk Is going to really get us to think outside the box, a lot of Important Issues of governance, and then we are going to really devote the afternoon to lot more of building nuts and bolts Issues and practical Ideas. To index

Remarks by Ron Oakerson

our next speaker Is Ron Oakerson. I became familiar with Ron Oakerson's work over ten years ago when he was doing some work as a staff analyst for the advisory commission on Intergovernmental relations, which really Is looking at different ways of governing metropolitan economies.

he Is the author of the book which was distributed. I strongly urge you to read this. It Is a thin book, but It Is rich In Insight and concepts and Ideas about not only government, but also governance and how we govern In an age of regional urban economies.

to be quite honest, I backed Into the governance Issue really because my focus Is urban development, It really wasn't governance. This Is the first book that I have seen that has really pulled the governance Issues together In a way that makes sense In the American context.

the bio notes: Ron Oakerson Is no longer with the advisory commission on Intergovernmental relations. He Is now professor of political science and chair of the department of history and political science at Houghton college In new York.

and Ron Is going to give us a few things to 4 think about, I think, In terms of governance.

so, Ron.

Mr. Oakerson: thank you. It Is a real pleasure to be here with you In a place that Is teaming with such possibilities that could place Los Angeles and San Fernando valley on the cutting edge of local government reform.

my presentation Is going to be conceptual rather than empirical. What I am going to try to do Is briefly sketch a new way of thinking or a new paradigm of metropolitan organization.

I couldn't make up my mind between two titles, so I have given two titles to the presentation. The first, "how to organize and govern complex metropolitan areas." the key word Is "complex." what we need are governance structures that are able to address multiple problems simultaneously where those multiple problems are as diverse as education and fire protection, water supply and policing, each one requiring very different governing capabilities and also, quite Importantly, each requiring collective action at quite different scales of organization from the neighborhood to the greater region.

the more provocative title Is "how fragmentation works." fragmentation Is the word that Is typically used to bludgeon metropolitan organization In the united states. But It has a neutral definition. It Is simply the number of local governments per capita. And that Is something that obviously can affect metropolitan governance In a variety of ways.

5 If we look empirically at the relationship between fragmentation and total spending by governments In a metropolitan area per person, the total amount spent by governments per person, that relationship Is not positive, It Is negative; that Is, greater fragmentation Is associated with lower total government spending per person.

so the popular Idea that more governance equals more government Is simply not so. However, this Is a counterintuitive Idea.

In order to understand that, It Is Important for us to engage In some rethinking of how we conceptualize metropolitan areas and metropolitan governance.

I want to begin here by distinguishing between provision and production of services, two fundamental activities that all local governments engage In but which need to be distinguished.

provision activities Include choosing a basket of public goods and services plus private regulations; raising revenue; arranging for the production of services, the two main choices being either producing a house or contracting out with either a governmental entity or private producer; and then monitoring production to see that It accords with the quality standards that are appropriate.

It Is possible for some local governments to function as pure provision units and produce next to nothing In-house. Provision activities are quite different from production activities, and I simply listed these out here so that we can get a sense of what the difference Is.

production Involves obtaining factor Inputs, applying basic knowledge, obtaining time and place Information. This Is quite Important for service delivery to discrete communities.

organizing and managing personnel and facilities, coordinating with citizen coproducers. This Is something of a term of art In the field, but If you think about things like the neighborhood watch and business watch organizations with whom police must coordinate, you get a picture of what we are talking abut here. Also coordinating with other producers. But I'll be having more to say about that later.

provision and production are very different activities, and therefore different criteria apply to each one of them.

Imagine a community of citizens choosing a provision unit. What kind of criteria would they take Into account If they could simply choose what unit of organization, what unit of government would make provision for services In that community? one criteria Is the ability to act collectively and In particular to Include within the collectivity those who benefit from the collective action. This Is going to point toward a kind of minimum size organization.

also, there Is the ability to respond to community preferences. This tends to limit size. And assurance that the community Is going to get what It pays for, what we sometimes call fiscal equivalence. And ability to 7 hold officials accountable.

production criteria are quite different. We are concerned with efficiency In a least-cost way; and, In particular the public sector, the ability to achieve appropriate economies of scale while avoiding diseconomies; an ability to respond to service conditions that vary from place to place; and ability to mobilize knowledge and Information.

all of these also raise very Important size Issues. We know, for example, from very careful studies on police services, that patrol service, the basic police service In many ways, Is probably best done by small and mid-sized departments. And In fact small and mid-sized departments consistently outperform large departments. By large I mean something bigger than 350 officers.

this Is true controlling for the variable service conditions that police departments may face. At the same time, something like sanitary waste management may be quite different where large jurisdictions may outperform small jurisdictions, but only up to a point.

and so what I want to do Is think about a metropolitan area as what I call a local public economy that consists of an array of provision units linked In various ways to an array of production units.

provision units Include homeowners associations, what we usually call general purpose governments but probably really ought to be called simply multipurpose governments since there are really very few truly general 8 purpose local governments In the united states, and also special purpose governments or single purpose governments.

these are linked to various production units, some of which are organized In-house, others by contract or are jointly organized.

If we look at the structure of a local public economy on an area wide basis, we find that the provision side of public economy Is structured quite differently from the production side.

structure of the provision side Is a nested structure where one has very small units that are nested Inside somewhat larger units nested In still larger units.

at the base we might find homeowners associations. And I Include homeowners associations here because, although they are privately organized, they do have the ability to use coercion, as you may be aware. And In those areas, In those neighborhoods where homeowners associations don't exist, It may be necessary to create the functional equivalent of a homeowners association.

these tend to be nested then Inside relatively small municipalities. I say relatively small because I think there Is no Ideal size.

municipalities may be quite small or they may be somewhat larger, depending upon the sense of Identity which people share with one another, the community of Interest that Is shared by their citizens.

when a citizen asks himself what do I really care about, where do I want my voice to count the most, the answer to that question Is going to Indicate what the boundaries of a municipality ought to be.

If we look at the structure of the production side of the local public economy, we find It Is organized by what I call service sectors: a police sector, an education sector, a street sector, a parks and recreation sector, and so on.

organization tends to be differentiated within each sector by service components as well as differentiated by the areas served.

now, the best way to look at this Is to look at a couple of examples. If I have the right slide up here, I think I do.

do. We can look at the police service sector In St. Louis city and county, which Is coincidentally about a million and a half people, not unlike the size of the San Fernando valley. There are In St.. Louis city and county 92 provision units that would have authority to make provision for police service. However, there are 66 what we would normally call police departments.

police departments are quite variable In what they may or may not undertake. All 66 of these produce some sort of patrol service. However, there are only 30 units that dispatch patrol officers.

and then If we look at still other components of police service, there Is one major case Investigation unit for the entire metropolitan area, St. Louis city and county, there Is one forensics unit, and there Is one entry level 0 training unit.

so that one of the most highly fragmented metropolitan areas In the united states has managed to fully Integrate the production of major case Investigation, forensics, and entry level training In the area of policing.

second example: street maintenance sector In Allegheny county, Pennsylvania, which Includes the central city of pittsburgh.0 provision units making some sort of provision for street maintenance, 125 of those again making some sort of -- doing something to produce residential street maintenance; 25, a sharp reduction, producing street sweeping; and only three units organized to produce arterial street maintenance.

now, It's obvious If you look at the structure of production In these areas that this Is a structure that Is driven by economies of scale. What you see Is a kind of Industrial organization model In which there are a few very large units, supplemented by a very large number of small units. It Is not unlike the way the motion picture Industry Is organized.

what about coordination? I don't have too much time to say much about this except that often we seem to prefer Intraorganizational coordination to Interorganizational coordination. But coordination really depends upon Incentives to coordinate, and sometimes those Incentives are stronger between organizations and between jurisdictions than they are within large bureaucracies.

In fact -- and this can be easily documented -- highly differentiated local public economies exhibit very high levels of Interorganizational coordination.

what about coordination across functional areas? I have been emphasizing coordination within production sectors. It Is necessary to have coordination across functional areas, but at multiple levels, especially, I would suggest to you, the neighborhood level.

when service production Is vertically and horizontally Integrated Into a single production unit, It Is the neighborhood that Is In fact fragmented among a set of large service producers, many of whom never talk to one another within the neighborhood.

well, I come to metropolitan governance finally and the criteria that ought to apply. First we need an ability to enact areawide enabling rules to govern matters such as Incorporations, boundary adjustments, revenue sources, and the authority to provide services, which Is always, In some way, limited.

we need an ability to address both areawide and highly localized problems and everything In between as well, an ability to resolve Interjurisdictional conflicts and to build areawide consensus on key Issues as well as to limit -- notice I don't say eliminate because I think It's Impossible, but to limit -- fiscal disparities among jurisdictions.

then I would add I think we need what I would call strong representation and accountability, easy citizen access.

In particular, those who deliver services to a neighborhood should be directly accountable to that neighborhood.

I drew an example from St.. Louis county earlier. There are 800, at last count, 873 local elected officials In St.. Louis county. Now, If you compare that to a situation where a million people are represented by a relatively handful, relative handful of representatives, It Is simply Impossible that the quality of representation could remain the same.

what sort of metropolitan governance structure seems to work? If we begin with a set of relatively small municipalities and school districts at the base and then we add to that a general purpose noncompetitive umbrella jurisdiction -- I say noncompetitive because If you have a lot of unincorporated territory, that umbrella jurisdiction, such as a county, finds Itself directly competing with municipal service providers -- and when the county Is directly competing with municipal service providers, It Is frequently less able to serve the kind of honest broker role that Is needed.

you add to that then an ability to create special purpose jurisdictions both within municipal boundaries and as organizational overlays, you begin to get some of the flexibility that Is needed to keep a metropolitan area current. Add to that a variety of civic and local government associations, and I add here civic and local government associations. There Is a sense In which one needs a government structure that Is parallel to civil society where 3 civic organizations begin with homeowners associations and neighborhood associations and then Include areawide associations such as the economic alliance; and finally access to the state legislature for needed areawide legislation which has tended not to be a problem In California with a strong home rule tradition.

experience has shown that metropolitan governance Is Indeed possible without metropolitan government.

much of metropolitan America Is well served by highly differentiated local public economies, but the challenge that we face today Is to bring the benefits of a diverse local public economy to large central cities. This has begun In many ways. I would mention one In particular, business Improvement districts which entail real ability to act collectively and exercise limited authority and assume effective responsibility for some piece of the local geography.

If we were to add to that what I would call default units, a default unit, using the term the way a computer programmer would, a default unit of local government Is the unit of local government you have as long as citizens don't exercise their authority to create something else.

If you add a set of default units that would resemble the classic American township and then allow citizens to organize within those boundaries subject to a set of rules and procedures, then we can create a dynamic adaptive and responsive local public economy that Includes the central 4 city.

thank you very much. To index

Question and answers

Mr. Scott: If you have any other questions, you can bring them up here. But we have a few here.

Question for Mr. Oakerson: what could Los Angeles do to get there to avoid the possible reorganization breakup? 

Mr. Oakerson: I think we are In the fortunate circumstance where there are a number of ways, excuse the expression, to skin a cat.

there Is no one right way to organize metropolitan areas. Metropolitan areas have to be responsive to various circumstances, which Include their history, how they got where they are today. And this, to some extent, Is always going to constrain how a metropolitan area will be organized.

It Is Indeed possible to decentralize a central city, to create the kind of Institutional Infrastructure that I was talking about within that city, and attain the benefits that I was describing.

on the other hand, highly centralized city governments have frequently not shown much of an Inclination to decentralize effectively, and It may be necessary then for citizens In various parts of that city to find other ways of proceeding and perhaps other ways of exercising leverage over the matter.

but I think that there are a variety of ways In which one could go. One would Involve decentralizing the city 5 of Los Angeles and leaving the boundaries of the city of Los Angeles as they are.

but It Is also obvious that the San Fernando valley with 1.6 million people Is fully capable of standing on Its own as a metropolis; I would not say as a single city, for .6 million people Is probably too many people to organize as a simple city.

Mr. Scott: Question for Joel Kotkin: how would you deal with regional Issues like transportation or education?

 Mr. Kotkin: well, first of all, let's start with education. Education, I am not necessarily sure you would have to deal with It regionally. Actually one of the biggest problems Is that so much of the powers actually at the state level, I think the LAUSD Is one of the best arguments for decentralization that anyone has ever concocted.

on transportation I would be In favor of basically ad hoc organizations for things that are needed. In other words, obviously If you need transit districts that are regional, you have regional agencies that do It. I don't think that breaking up the city of Los Angeles necessarily means that you throw out every single regional entity.

the key thing Is, I think, as professor Oakerson Is suggesting Is that you have appropriate agencies for where they are needed, as opposed to creating a super agency.

I think the real agenda that we are arguing against here Is the Idea that we should create a kind of SCAG-like regional planning agency that actually has power. I don't think that will politically ever happen, but I really think we have to try to devolve power, wherever possible, from the local level and certainly not look for excuses for It.

but, obviously, some of the things like water and power and some transportation Issues have to be handled regionally, airports.

Mr. Scott: a question for Sam Staley: how does localism work with a trend toward regionalization of airports? 

Mr. Staley: one of the Issues we have to deal with In American government that Is we tend to look at public services and city governments as If those services have to be provided within the context of a comprehensive local government. In other words, If you have a city that Is supposed to provide garbage, that's supposed to provide transportation, that's supposed to provide the whole range of services within that particular entity, I think one of the things that we are finding In the research, as well as looking at how these metropolitan areas function, Is that that probably Is not the best way to organize the provision of services.

there are some things that are clearly going to be regional In their approach, but then there are also things that would be local. And the question Is how do you differentiate what those services are. And that Is going to be a different solution for different services.

now, If I'm Interpreting, the question directed toward me Is that do regional airports and localism, I think that the way I am going to Interpret that question Is that 7 what do you do with a local government or local neighborhood group that tries to exercise nimbyism, which Is "not my backyard," to prevent something that might be of a regional benefit.

I think we found this -- and It's not just airports. Airports are really the new transportation system that -- we ran Into the same problems with highways, railroads, that type of thing.

It may very well be that airport transportation Is something that has to be done at a regional level and It needs a different set of governance Issues to deal with that.

and It Is also, of course, not something unique, although In Los Angeles there Is a real question of what do you do with lax and Burbank airports, and that type of thing.

but In the context of airports, In many cases they are dealt with as regional entities. That probably ought to continue.

I want to defer this a little bit. I think there Is going to be some local perspective on that In the last discussion where we really bring these things home to southern California, Los Angeles, where we can talk about that more directly, particularly bob Poole has been working on some of these Issues.

Joel, do you want to -- Mr. Kotkin: I thought you might want to bring up the Lakewood example, In other words, that you can have a city that gets services from lots of people predominantly not from Itself that are being contracted for many of these things.

8 and, In a sense, an airport Is something else that you contract with.

Mr. Staley: correct. And then this whole notion -- and my background Is primarily as an economist, and of course the Interesting thing and the perspective Is when I backed Into the governance Issue was that suddenly I was thinking of services that were provided within a spatial and geographic context.

as an economist I don't think of that, I don't think of It as a product being produced only within certain orders. Take garbage collection. I look at It as a service that Is provided, and there may be a spatial context, there may not.

I think what we are finding Is that so often with public services, we do tend to think of them In these narrowly spatial contexts, In other words, the boundaries of Burbank. And what I think Sam Olivito later on In the discussion with Ron, as executive director of the California contract cities association Is In fact many cases there are services that are broader In scope than geography lets us.

but we can provide those sort of separating provision of production as Ron talked about and get the regional efficiencies without actually having to do It In-house.

so again, speaking to these Issues as diversity, that Is exactly, Lakewood Is one of those, probably the most terrible example. To index

Mr. Scott: Question for Ron Oakerson: on the topic of coercion, what Is your opinion of the neighborhood councils system relative to their ability to Influence local government and provide services? 

Mr. Oakerson: I think the Important thing at the neighborhood level Is to provide some real ability to act collectively. And If collective action Is entirely on a voluntary basis, then It Is probably not going to be successful In the long term.

advisory councils are probably useful. But at the same time, If you want people within a neighborhood to take responsibility for their neighborhood, then they must have some real authority. And I would Include both taxing authority and some sort of limited regulatory authority within the scope that Is required.  To index

Mr. Scott: Question for Joel: what If the people vote not to secede, how will our problems be resolved without neighborhood councils? Should we be forming these councils now, just In case? 

Mr. Kotkin: they have the neighborhood councils; It's just they don't have any power. So you would have to go back and somehow change the legislation on the neighborhood councils.

I personally believe that If secession comes to a vote, particularly given the movements In Hollywood and In San Pedro, that It would probably pass, so that I don't really see that If It actually gets to a vote that It will be stopped on that level.

It may get stopped In the courts and on some 0 technicalities. But the neighborhood councils were a great opportunity but failed. That's why I think this Idea of boroughs might make sense because It brings In another different formulation. Neighborhood councils I think are basically dead on arrival.  To index

Mr. Scott: this Is a general question, so I'll throw It to Sam: how do you handle or develop policy regarding Infill of larger residential projects In older, smaller neighborhoods? And same question as to Industrial? 

Mr. Staley: my solution to that has always been that when you are talking about Infill, really, whether It's residential, Industrial, or commercial -- well, and actually It speaks to something we haven't even talked about. We are talking about governance here. But we haven't really even discussed how we might change the mechanisms or the things we do In local government to Improve the way we deal with certain Issues like Infill. Even If you would move something to a local level, for example, you may not have the tools In place to be able to effectively deal with this.

certainly one of the things that Joel's work Is doing -- and Joel can correct me on this -- Is that he Is trying, and what we are trying to do In reason Is recognize the dynamic nature of cities; In other words, these cities change and evolve over time.

and one of the things that I focus a lot on the Issues of land use and management Is that very often our plans have these visions of trying to accommodate dynamism, but the actual process that we use to Implement the plans basically keeps things In place and really prevents the kind of evolution.

so I think one of the things we have to do Is go back and rethink the way we do planning, development, approvals, development control, which I think ultimately the solution there Is going to be going more local than It Is regional In many cases, Interestingly enough. I found that once you move things to a regional level, very often other kinds of Interests begin to dominate the process, and not questions about necessarily what Is the most Important or the most relevant for a local area. But that also means thinking very hard about what are the things that we want a local government or neighborhood councils to do and how extensively Involved should they be In some of these decisions, which we haven't really talked about.

but I am curious as to both Ron and Joel's comment on what about the degree of Involvement In small governance. How does that Issue factor Into your -- Ron's Issue of governance, but also Joel's Issue of the evolution of these communities and how diversified over time.

Mr. Oakerson: are you talking about degree of Involvement on the part of citizens? Mr. Staley: correct.

Mr. Oakerson: well, I think one of the obvious advantages of true local government Is that It facilitates the Involvement of local citizens.

In very small municipalities officials tend to be part-time officials; they have got full-time jobs doing something else. They will hold council meetings on weekends and In the evenings when citizens can easily attend. They encounter each other In the barber shop and In the corner supermarket. There Is a sense In which the governance of a community Is Integrated Into the life of that community, and you are really being governed by your friends and neighbors, and this Is what I think classic American local government Is all about.

Mr. Kotkin: a couple things. I don't know how familiar you are with the situation In California, but with the terms limits, we are actually governed by a group of vagabonds who keep changing where they live so they can run for another office. They go up the food chain and down. Soon tom Hayden will be running for dog catcher In Glendale or something.

so that Is the absurd case that we have here In southern California where we have a professional political class that basically Is on the move all the time looking for a seat.

on the Issue of brownfield, I think two points, Ron made a very Important point. If a local community gets the tax benefits development where they see It helping their local economy, they may be less nimby.

the more the government Is further away, then the environmentalists or the other kinds of specialized lobbies have more Influence over It.

and one big Issue on both brownfields and -- I think a major Issue on both brownfields and Infills In general 3 Is I think a growing political conflict Issue which the media has stayed away from because the media either doesn't see It or doesn't want to deal with It, but It's going to be a big Issue here In the San Fernando valley and elsewhere, which Is there are communities, basically working class heavily Latino communities that want to see economic development because they are going to get jobs, they are going to have some of the benefits. But you have a political system controlled by a professional political class and, to some extent, by nimby Interest and by environmentalists who fundamentally don't want to see any growth at all.

I think one of the things you do Is by having real local governance In local power, then at least when you argue about an economic development, there Is an upside to that economic development.

the big problem we have now Is frankly what good Is It to me If there Is a big economic development In my part of Los Angeles since the benefits of It are going to be spread all over.

so If I am going to get some pain, like In terms of more traffic or more noise or whatever, I am not getting any gain, whereas In Burbank, I think the people In Burbank have been relatively more willing to accept economic development In their community because they see the benefits for taxes, for schools, for Infrastructure.

In the city of L.A. where It Is all spread out, people say, "why should I accept development In woodland hills when I am not going to see any of the benefit to It?"  Mr. Staley: what I would like to do Is at this point -- bob, If you could hold on to the Initial questions we have because these are all very relevant to the very next panel we are going to be doing, and we can revisit these because on the next panel -- It Is ten o'clock.

Mr. Fleming: one thing, we Invited several of the major candidates for mayor, and we are very pleased that Steve Soboroff Is here today to join us.

Mr. Shea: candidate Joe Shea Is here too.

Mr. Fleming: okay. We are going to talk to you In a minute.

I want to have Steve say a few words about this kind of gathering, this kind of coming together of the minds from all over the world to talk about city government.  To index

Mr. Soboroff: first of all, the economic alliance from the get-go has been an Incredible organization.

and what Is this Is about, this happened to me at the airport. I talked about It before. I went up to a dollar bill changer, but my dollar bill In, two quarters came out the bottom. You know what I did to the machine? I kicked It. That Is what we are about.

people In San Fernando valley and the taxpayers In San Pedro, the tax payers In Hollywood are taking that dollar, which Is their hard-earned tax dollar, and putting It Into this machine which Is city hall which are kicking pretty good because out the bottom Is only coming two quarters worth of services In their minds.

what I see and why this Is so Important Is what 5 people In Los Angeles all over Los Angeles want Is very simple. They want to walk out their doors where they live and see the street lights work and see the trees trimmed and not trip on the sidewalk and not have their cars bottom out and not see construction going on during rush hour and major arteries and send their kids to a neighborhood public school and go to a good park and good library and, above all else, push 911 and have someone show up.

that Is what It's about. That Is what It's about to me as a mayoral candidate. And as I listen to you and as I listen to Joel talk about Burbank and what Burbank has that we haven't had here Is a guy by the name of Bud Ovrum who runs Burbank's economic decisions by himself. There Is a very strong management form In the city of Burbank. It's a city manager form of government. And bud makes these Incredible economic decisions.

here we need more community Input than what Burbank has. So I am delighted and I am proud. Before I decided to run for mayor, I was one of the founding members.

twenty-five hundred hard-earned Soboroff leasing associates from the Encino office, dollars went Into the economic alliance, and I think It was a great Investment.

and the only other great Investment that I would recommend right now Is vote for Soboroff for mayor.

sorry, Joe, but I had to put that In.

Mr. Fleming: Joe, we are going to get to you In a minute.

thank you, Steve. We appreciate your coming.

and I am glad, Joel, that you pointed out one of the things about Burbank. The problem you have when you localize power Is nimbyism. And the antidote to nimbyism, as Joel Kotkin pointed out, Is the fact that when there Is economic development, the tax Increments from that economic development stay In that area to be spent by the people In that area for any public purpose they deem Important.

we are going to talk about that more later on as this conference progresses.

right now we are going to take a break for about ten minutes, and then we will be back. Thank you.  To index

Comments by Robert Poole

 Mr. Scott: for our next speaker, we have a person who Is going to be facilitating that, a person who we are very honored to work with, who has been Instrumental In putting this together. I guess between he and David, somewhere In there was the brain child of this event.

Robert Poole Is the founder of the reason foundation, a national public policy think tank based In Los Angeles, which he launched In 1978. He Is a nationally known expert on privatization and transportation policy and he has recently left the job as president of reason foundation to do some secret transportation work In the east.

so I give you bob Poole.

Mr. Poole: thank you very much.

the subject came up In the last session of 7 economies of scale, of Is It true, as a lot of the background assumption seems to have It, certainly what you read In the popular press, that the assumption seems to be that In order to have the low costs, unit costs of government services, you need to do things on a bigger and bigger scale and that everything should be done by massive cities or regional government.

twenty years ago when I wrote my book "cutting back city hall," which Is the first book to ever look at municipal outsourcing of service delivery, there was already some discussion In the academic literature questioning that Idea that bigger Is necessarily better or more efficient.

but In the last 20 years that evidence has proliferated, and It turns out to be a much more complex subject than many people Imagine.

we have three speakers today, all of whom have some very solid knowledge and experience In looking at those kinds of questions In what size government should be for delivering different municipal services.  To index

Comments by Andrew Sancton

our first speaker Is Andrew Sancton, comes to us from the department of political science of the university of western Ontario.

I am not going to give you his whole bio. I just wanted to point out that his most recent area of study has been the metropolitanization of certain major governments such as Toronto In Canada, and he has written a book called "merger mania: the assault on local government." with that I turn It over to Andrew Sancton.

Mr. Sancton: and thank you very much, Robert.

It's a real pleasure to be here today.

as you may know, Canadians are often very anxious to get the attention of Americans, to kind of get noticed by Americans.

after furious lobbying, our prime minister managed to make It to the white house today as the first foreign visitor to meet president bush.

the great fear In Canada was that president bush was going to go to Mexico before he talked to the Canadian leader, and this would have been a disaster In Canadian diplomacy because we are supposed to get this attention first.

so If the prime minister Is lucky tonight after all this lobbying, he will get his ten-second clip on the American newscast and we will be right up there on the top of the agenda.

you people here today have asked two Canadians to be on this panel, and I don't think either of us lobbied to be Invited at all, so It Is a real pleasure to be here.

I know Canadian concerns In themselves aren't crucial to the debate that Is here. But when you put some of the things that are going on here In perspective and look at them In the overall picture, I think some of the things that have happened In Canada are very relevant.

In other words, It Is probably a good Idea to know what happens when the exact opposite of what Ron Oakerson was talking about In the previous panel, It Is a good Idea to know what happens when the opposite of that sort of arrangement gets Implemented. And we have lots of experience with that In Canada.

perhaps the first thing that I need to say to put this In perspective Is that our provincial legislatures, the equivalent of state legislatures, of course, really do exercise their authority over municipal governance. They have a legal authority to change municipal boundaries, abolish municipal boundaries, and they do that. They do that with a vengeance, particularly recently In some provinces, especially Ontario.

so I very much understand that that's different In Canada than In the united states, but of course It gives us a kind of a laboratory In a way to see what happens when certain dramatic changes are made.

I want to suggest that there have been two waves of consolidationist, amalgamationist, fervor In Canada In recent years. The first was In the 1960s and '70s, and that was brought about by the belief that municipal governments should be bigger In order to do more things. It was primarily a movement that was pushed on the left of the political spectrum at a time when the left was certainly more powerful and Influential In politics. But the perceived problem was that municipal governments weren't big enough, strong enough to deal with all the big urban problems at the time, so you had to make them bigger either by creating multipurpose metropolitan governments of the kind that we created In Toronto.

the most dramatic change of all came In the city of Winnipeg, the capitol of Manitoba, where 13 municipalities were merged together by a social democratic government committed to equality and equal taxes and better distributive programs. Municipalities were all put together, and a unicity was created.

now, I think there are going to be very good debates about whether that was a good thing or a bad thing. I think there are going to be more meaningful debates where both sides have stronger arguments when you look at having all these mergers for the purpose of creating a bigger government that does more things.

one thing Is absolutely clear, however, from the experience of the '60s and '70s In these mergers Is that they did not save money. Nobody argued that they were supposed to save money. The whole purpose In a way of these mergers, same as the New York merger, actually, In 1898, was not to save money, but to spend money. And they were pretty good at spending money.

now the next wave has come In the 1990s, and It's the one that I think Is more relevant In a way because It Is more recent, and It's certainly the one that's more topical. It caught me totally by surprise.

In 1990 I was asked by a quasi-government organization to write a report about what had happened In the Canadian metropolitan governance, what was likely to happen, and I was foolish enough to write that there would be no more big unicities or big metropolitan governments In Canada because we had begun to understand that these things led to higher costs and It was a time, even In Canada, of great pressure for government restraint because we were running huge budget deficits, and everything seemed to be getting out of control. So It seemed logical to me that no provincial government would want to create these big Institutions that everybody, I thought, knew spent more money.

one of the reasons I knew they spent more money was because I read the kind of work that Ron Oakerson has done and colleagues, the advisory committee on Intergovernmental relations In the u.s. and other organizations that did a lot of work to look at the effective size on municipal expenditures, and the evidence certainly showed that there were no savings by creating municipalities that were bigger.

that was a big mistake that I made writing that because It almost didn't -- Inevitably It would have led to -- governments seemed very Interested In amalgamations.

the first amalgamation came In 1996 when municipalities In the Halifax area were merged together to create a huge municipality In geographic terms.

you might remember the tragic swiss air crash and all those pictures of the beautiful seacoast area In nova Scotia that seemed quite remote. That area of Peggy's cove Is In the same municipality now as downtown Halifax. It Is just an area that takes up a very large portion of the province of nova Scotia.

one of the arguments given at the time was that outside Investors, mostly from the united states, got too confused when they came to Halifax to Invest because there were four municipalities, It would be much better for economic development If there was one. Now, most of these -- a lot of these Investors came from Boston where there are 282 municipalities In the metropolitan area, so I found that argument difficult to follow.

but another argument was that It would save money, I mean that nova Scotia was In bad financial shape, It would save money by merging four municipalities.

everybody, even the advocates of the merger, now say that that did not happen, there was no money to be saved. In fact, expenditures went up. And the reason for that, the cost drivers behind that, was the Incredible political pressures to harmonize wages of municipal workers at the highest level and to push services up to more or less the highest level whether people In the area wanted It or not.

so It was pretty clear that the Halifax merger didn't save money.

The biggest merger, however, was In Toronto that came Into effect In '98.

If we could have the first map.

the map for Toronto, looking at that area there, that was the original metro Toronto. The reason I show that Is because It was not the merger of all of the built-up urbanized areas of Toronto, It was the sort of poor metropolitan area that had been known as the metropolitan municipality, metropolitan Toronto, was merged to create a city of two million people. The population of that whole area 3 Is four million. So you don't even get a comprehensive government for the whole area by merging Into two million.

I just mention this because It Is the biggest merger In Canada and because really the sole purpose of that was to save money.

the government was a conservative government that desperately wanted to stop Increases on municipal expenditure. They predicted there would be a saving of 300 million Canadian dollars annually from this merger, which was about 2.7 percent of the gross municipal expenditures.

the official annual savings from this merger are now stated as being 136 million, which Is less than half, but that does not Include, does not Include, the costs of wage harmonization or service harmonization. And those costs are just coming on-stream now.

In the first three years of the merged city of Toronto, there was a great political effort to hold taxes even, hold taxes at a level, no tax Increases. And there were loans and subsidies put In by the provincial government to stop that from happening and to get the mayor, who supported the amalgamation, who won the first election, to get him re-elected. He has been re-elected.

Toronto Is now In a financial crisis facing a double-digit tax Increase situation. The budget has not been adopted. They are short 300 million dollars In operating costs, which happens to be about the same amount of money that was originally predicted from the savings.

Now, If I can have the second slide.

This Is the new position of the mayor, last man sours on amalgamation, and It says It has been a disaster.

More and more people are beginning to recognize that and to see many of the problems that amalgamation has brought the province refuses to help, refuses to acknowledge the megacity, as It Is called, was a mistake. And they say that the amalgamation was kind of still a good Idea; the problem has been that the local politicians have bungled It In some way, that they have refused to make the tough decisions.

And this Is, I think, the dynamic that we get with these amalgamations. The accountants predict cost savings. They go over all the figures, start adding up how much to save by getting rid of a fire chief here and a clerk there.

The local politicians take over one of these things, manage to squeeze out some savings like that, but the harmonization of costs and wages swamp those kinds of savings. So you get more costs.

The conclusion Is -- we have gone through this many times In Canada now -- Is that the amalgamation should have worked, but somehow It was bungled In the operation. So we are still searching for that perfect Implementation that will actually lead to savings. It hasn't happened yet.

The next, If I could go back to the previous slide on the bottom map.

The next place where this Is happening Is In Montreal where the provincial government In Montreal has now merged 27 municipalities on the main Island of Montreal, at the bottom map there, the bottom Island, which Is Montreal.

And they are going through exactly the same thing.

On January 1st, 2002, all of those 27 municipalities have merged by legislation Into one, and they say that this time they are going to get It right. They are already paying the transition team, each one of them, more money than the mayor of Montreal makes. There Is about ten of them on the team. This Is the next step. We are going to see whether this merger actually will save money.

It seems somewhat less Important to the provincial politicians who sponsored It In Quebec to save money. So the pressures to raise costs are likely to be even higher.

But that Is basically the story In Canada. We are a laboratory If you want to see what happens when large municipal governments are created. And what we know about that Is that It raises costs. It raises services probably In some areas. But of course we have absolutely no evidence that the people who had their services raised and their taxes raised wanted the Increased services. Nobody asked them whether that was what they wanted or not because this was done without any kind of local referendum.

So If you want to see what happens with big municipalities and costs, which Is the subject of this panel, that Is the story.

There are also some experiences about decentralization or attempt to decentralization In these cities, and after you merge, how do you have some kind of opportunities for local participation. I must say the evidence on that Is not very encouraging, but I know that Is a different subject from what we are supposed to be talking about here.

Thank you. To index

Remarks by Milan Dluhy

Mr. Poole: we need to move along to our second speaker, professor Milan Dluhy from the department of political science at university of north Carolina, Wilmington.

Until very recently, though, he was director of Florida Institute of government and metropolitan center In the college of urban affairs, Florida International university, and In that capacity has been Involved In quite a number of feasibility studies of new Incorporations In Florida where Florida Is one the fastest growing states In the country.

So, Milan, let's hear what you have to say.

Mr. Dluhy: I am going to say good afternoon because my clock Is still on eastern time. Good morning, good afternoon. It's a pleasure to be here.

Did all the handouts get out? I am going to be a nonpower point presenter, and you may have to look at me, maybe not look at me, but I do want you to take a peak at those tables. You can take them home, show them to your friends, whatever.

Let me get started and get right to It. What I heard last night, meeting with some of your representatives, and what I have heard today so far, we are dealing with an Issue here In Los Angeles very similar to what we dealt with 7 In south Florida, and that essentially Is how do you organize a two-tier form of government, what Is left to the regional level and what Is left to the local level and, more Importantly, how large should those level governments be.

That Is a big question and a big Issue. But that Is what you are basically talking about here, whether we are talking about district councils In San Fernando valley or whether you are talking about further municipal Incorporations, you are talking about the lower level. And we just went through that In Florida, and I guess that Is the reason that you have asked me to comment.

I will try In a few minutes not to tell you too many stories but to give you a picture of what has been going on In the last decade down In southern Florida because It Is exactly what Is going on here In the L.A. area. There really Is no difference.

I think the motivations, I think the arguments that are being used, I think the data that's being looked at are pretty much the same, and I am not going to say that the south Florida area Is any further along than you are here.

For those of you that are unfamiliar with the Miami Dade region, If we give a liberal Interpretation of the metropolitan area, It Is just under four million people, running from the keys up to west palm beach. And of course Miami Is the signature city, just like L.A. Is the signature city of this region.

I did pick up a book and bought It, "rethinking Los Angeles," done by some professors over at u.s.c. I 8 thought It was very Interesting. I will just read you a couple of things from It. It said L.A. -- this Is talking about L.A. -- Is an endless expanse, continuous city, sprawl, et cetera, and has a decentralized economy, It has self-contained communities, enclaves along racial and ethnic lines, It has a massive, Informal economy, poverty, wages, Immigration, It has a collapsing Infrastructure and Inadequate public transportation.

I said, "I think I'm In Florida. By god." well, let me tell you, you may not think of Miami and the Miami metropolitan area, but they think about you, and you are like their big brother, and they are watching because you are someone bigger. But let me tell you, I think some of the Issues and the problems are almost Identical.

In 1991, after 25 years of not forming cities In Miami Dade county, which Is about two million people -- I am going to talk mainly Miami Dade county -- two million people and about 29 cities which are listed In your handout with various demographics and wealth, et cetera, what happened In Florida as It suburbanized, as the Miami area suburbanized and as you were suburbanizing here In the Los Angeles area Is Miami Dade county did a very strange thing and that Is the unincorporated areas never became Incorporated. So about a million of the people In the two million region lived In unincorporated areas, and the county government provided all the municipal services. About a million of the people, the other half, lived In cities, lived In 29 cities.

But there really was not much Incorporation.

There were two very small communities right after the second world war.

But In 1991 there was an Incorporation movement that started In the area, and I will just tell you, because you have been talking about why things happen, one was beach community of about 9,000 people. And their main reason for wanting to become Incorporated Is they wanted to see their mayor In the grocery store, but, more Importantly, they wanted to prevent condominiums from being built on the beach. It was a land use Issue, and that was It.

And they formed and they petitioned the county and they held a vote and easily became a city. Then a somewhat larger community of about 18,000 up the street a bit, a condominium community, everybody lived In a condominium, and they decided that they didn't have enough police protection because the county only gave them one police officer, one fte on three shifts.

Well, they are now a city and they have 30 police officers, and they are pumping Iron because they love It, right? And pine crest -- I'm just trying to do this to give you a sense of why people In communities form cities -- pine crest was a complete residential community of about 0,000, just under 20,000 It Is listed In there, 98 percent residential single family homes, and they were just petrified of having commercial strip malls on their one major artery that bordered the community. And so the only Issue that forced them, that caused them to become a city was exactly 0 that, they wanted to control land use.

I won't bore you with the details, but four communities formed In the '90s, became cities, and there are now six more In the queue to become cities.

The county has said they are going to get out of the municipal services business, and they are going to Incorporate all the unincorporated areas. The unincorporated areas are just like the San Fernando valley. It Is about a million people, so a little bit smaller than you.

So the question Is: where do you draw the boundaries? How big should they be? And we also know there Is a phenomena of cherry picking, and that Is that the wealthier communities, as you can tell on that list, they are the ones that want to go first. The county keeps telling them you have got to broaden your tax base and take In some low Income areas so that you don't punish the people when you leave the county. Does that sound familiar? Is that an Issue here? Last night It's a little bit of an Issue. It's a big Issue because If you don't draw these boundaries big enough, you will take communities with per capita assessed valuation of over 200,000, and the average Is about 40,000 for the year, a little different from LA, and you really will kind of take them off the top, take the cream off the top. And what Is left over In the county will be a severe shortfall estimated to be a hundred million dollars In local county budget.

The one thing that happened that I think, In all of this, was probably a mistake, In 1994 there was a study done of donor/recipient communities. And what they did Is they took all the communities, they said: what do you pay In taxes and what do you get In service? There were no matches, there were no one-on-ones. Okay. So you were either a donor or you were a recipient. And so you guess who went first.

All the donors wanted to pull out because they said, "we're under-served," they weren't getting a full dollar for their service. In short, they didn't believe In redistributive programs or transferring funds.

That Is what fueled the movement In Florida.

That was the Issue. It still Is the Issue today. They have put a moratorium of three years where they wouldn't allow any more Incorporations. That moratorium Is now off. As I said, there are six more communities that are waiting at the back door. And so where are we? Since I did do a fair amount of research, I would like you to just take a peak at the tables on the second and third page of my handout. They are very simple to read, I hope. I tried to make them readable.

We asked the question of economies of scale.

It's an Important question. And I think consistent with all of your speakers so far, we only found three services that should really justifiably be regional: fire and rescue, library, and comprehensive planning, the gist type of planning that requires big Infrastructure and Is very costly.

Interestingly enough and also consistent with research, all the other services were found to have as many economies of scale In the smaller communities. So the argument was smaller Is better and can be better.

When looking at performance, which Is the third table, we picked out some obvious ways of measuring service, quality, and performance. And guess what? Basically the same thing happened again. The response times which we used as a performance measure for fire and rescue, we used other measures, showed the same thing: that size, that Is the larger the size, works for some services but for most of them, It doesn't.

So I mean If you are just going to go on that kind of data, you would have a very small number of regional services at the upper tier, and everything else would be decentralized.

The last table Is we did a very large survey of over 5,000 people. And It basically shows that people living In the cities are more satisfied with their services than people living In the Incorporated area, which Is really the big government, the million people government.

I don't think you will find different results In other areas of the country. I think you will pretty much find the same thing. I am not arguing for communities of a thousand. That Is not what I am here to do. But I think you need two-tier form of government.

I will conclude by saying this: the county has responded In Florida. We are setting up community councils which look a lot like your districts, your district councils.

But they have done one thing you haven't done, and that Is they have given preliminary zoning power to those 3 community councils. They are elected officials, they have to stand for election, and they are the first entry point In the zoning process.

They don't have any money; otherwise, they are advisory. But they are lobbying now to get money for police to have control over 911 policing. That Is about where they are.

The more radicals want to do ten to 12 communities In the next ten years and create ten to 12 new municipalities. They don't want community councils. They want the full nine yards. They want to go out like In the San Fernando valley and try to figure out some way. I suppose you could have about ten communities In the valley. Depends on how you draw the boundaries.

I have one minute.

The surveys did show -- and I guess I'll end on this thought -- the surveys did show that the people that supported Incorporation, that wanted to move In that direction -- more education, higher Income -- they were non-Hispanic whites In that area, and they were people extremely dissatisfied with services. That Is what fueled the movement.

And I think the Miami area right now -- If you want to ask In the question and the answer period -- Is struggling with the same thing you are. They have gone a little way towards Incorporation, but they would really like to do a lot more sorting out and have a more rational, If you will, two-tier form of government.  Mr. Poole: we are keeping this on time so you have lots of time to get your questions posed and answered.

Thank you. To index

Remarks by James Nolan

Our third panel member Is jams Nolan, who Is our other expert from Canada, from Saskatchewan. He has been working with rppi for the last two years, actually, on a very large scale study which we call our competitive government study looking at the largest 50 cities In the united states, looking at them quantitatively and empirically and try and figure out how much value does each one provide for the major public services that It delivers to the citizenry. And those results are almost finished.

We are going to be publishing a major study on that this spring. And he Is going to draw some aspects of that research to talk about the question again of economies of scale, does size matter.

Jams Nolan.

Mr. Nolan: the first question I always get -- by the way, I spent five years In southern California, so I am somewhat familiar with the area. The first question I get, even from god-fearing people, Is, "where the hell Is Saskatchewan?" well, It's north of north Dakota and Montana.

So check It out. It's way up there. It's cold, It's farmlands. It's not a bad place, actually.

First slide.

As bob mentioned, starting out with this, I have been Involved with rppi for the last couple of years to do an extensive study which actually segues very nicely from Milan’s study of basically 50-plus cities In the u.s.

5 evaluating the performance of their public services.

I think what Is key to draw from what Milan said was we didn't -- well, we did end up aggregating some of the performance measures, which I'll discuss In a few moments here, but basically we took data on city services such as libraries, fire, police, transit, and we attempted to figure out which cities are performing better at doing these public services at offering these public services.

What I have done for this particular presentation Is extend those results ever so slightly. It turns out the methodology used to calculate performance measures can actually be extended to talk about discussions of scale economies and say whether or not the particular city Is actually offering a service at the right level of scale which would be least cost or at some other level of scale which might, say, either get bigger or get smaller.

And I think you are going to find -- to sort of kill my punch line now -- you're going to find that my conclusions jibe very well with what Milan said, that there appears to be evidence -- and again I stress that they are somewhat preliminary results -- the actual competitive cities project will be out probably a couple of months. But these results on a scale are preliminary, basically say that It looks like some form of two-tier government might be the way to think about this when you consider these scale economies or the economic side of It on service by service rather than aggregating across the whole city.

Next slide, please.

So basically I am going to describe the cities project ever so briefly here. We wanted to assess the relative performance of public services. We picked 11. And the reason we picked 11 services to study was because, as a lot of economists who like to bore you with details, by the way, contrary to what Milan said, basically we only found enough data on 11 services, and I'm going to go over those briefly. You are going to find out that In fact only about five or seven of those services actually have enough data to really say something concrete about scale economies.

So we are limited here by data availability.

And In fact, It turned out that In the reason study, the larger cities actually were a little more hesitant to give data out. It Is hard to find relevant data. The smaller places, the mid-size cities, the Tulsa, Oklahoma’s, for Instance, were quite forthcoming with this sort of data.

Okay. Very little academic research to date describes scale efficiency of public services. There are quite a few foreign studies done on efficiency In public services. Australia Is one place that has done quite a few on police services. In the u.s. there was a study In 1959 by a gentleman named Hirsch, and the title actually has the words In It consolidation and how cities will form or whatever. So 959 this was published. The debate's been going on for a heck of a long time In north America.

The most recent one I found was Norman walker at western Illinois university, I believe It Is, that did a study for Illinois trying to measure scale economies of 7 Illinois cities. And, by golly, he found a couple things, mostly police services he studied. And we're going to look at police In our samples.

Well, he found that, by golly, It looks like police services, when your city's beyond about 150,000 people, you are running at diseconomies of scale, which means that you should probably break police services up Into separate jurisdictions.

So the final question Is from an economist's perspective, and I'll discuss this as briefly as I can -- next slide -- are most public services so-called natural monopolies? And I'm going to explain what that Is In a second.

Okay. Here we have what economist's love to put up, which Is a cost diagram or any kind of diagram to tell a story here. Some of you have seen this before. I think It's worth revisiting here, just for the context of the conference and the symposium.

Basically what you see Is the natural monopoly section, If you see q star, which Is the minimal level of output Ideally -- this cost function describes what we call a technology. This might be a technology for providing water services; It may be technology for providing police services or fire. But you want to think of this as being a technology for an Individual service.

So over to the right -- over to the left, I should say -- we're Canadians; we get left-to-right mixed up -- over to the left you have Increasing returns to scale which 8 means that, by golly, bigger Is better. That Is the structure of technology, bigger Is necessarily better.

And even though we don't have conclusive evidence from this study, there Is a fair bit of evidence, for Instance, that water, which brought L.A. together as a unit, we've all seen Chinatown, that water In fact has great economies of scale that bigger Is better. And of course q star, we say, wow, we're at the Ideal level. We call that minimum efficient scale, we say, by golly, we are at minimum cost and we're right where we ought to be In terms of the size of the city and size of the public service provisions we have.

And over, of course, to the left or to the right -- I'm sorry -- we have decreasing returns to scale which says that, by golly, as we get larger, we are getting cost Increases, which Is sort of the "too many cooks spoil the broth" kind of thing. Okay.

Next slide, please.

The competitive cities study -- actually, I mention that for a second because we are going to get to the scale economies for a second here. The competitive cities data were used to compute some of the scale results.

We had data -- I said this was used to compute technical efficiency measure. The measure we used actually was a cost to this study. We were actually far more generous In saying let's look at your cost and find out what happened.

We actually went out and said, let's get data on physical Inputs and physical evidence, I.e., how many police officers you use, how many firemen you hire, how many trucks you would use for a trucking service, how many buses you have.

We actually said, okay, who provides a given service more efficiently, I.e., who transforms those Inputs Into more outputs? Who uses fewer Inputs to get more outputs? We call that technically efficient.

And you can see how that Is kind of a fairly weak notion. You could spend millions of dollars to be somewhat technically efficient. So we are trying to get the point here: Is there Is a structural Issue with the technology that says that these particular services may or may not be provided more efficiently If they are smaller or larger. Okay.

Down here we actually -- In the reason study we did efficiency scores for Individual services which were aggregated after we did It. But luckily we can, of course, draw back out the data for the Individual services to discuss things like who provided water services most efficiently In the sample, who provided fire services least efficiently In the sample, and of course we can do the scale economy scores.

We can tweak the methodology to draw up some scale economies results.

Next slide, please.

What Is kind of Interesting about the scale economy results we get, again, we don't really get -- because It's a very generalized methodology we are using, we don't really get specifics about how large a given city should be to provide a police service. What we end up getting are results 0 that say, sort of more discrete, to say you are too big, you are too small, you are just right. That Is essentially what we get, a sort of a trinary type result we get here.

So here are the services we end up getting. We had police, fire, and water provision, park service, very similar to what Milan had, actually, In terms of data. He had similar problems.

You will notice some of them -- now, an economist or statistician or a person who works with data, you look at this and you go, wow, I checked, let's see, buildings, observations over seven years. That Is not a lot of data.

So I am not even going to go anywhere near buildings In this particular study.

In the reason study we can actually come out and say amongst the small sample of four or five cities that we have In a given year, I can tell you who was more or less efficient because the methodology allows me to compare the performance of whoever happens to be In the sample for that year. But for scale economies I am not confident the method really works with that small a sample.

So what I have done, I have come out and said okay, I have picked transit because transit was a great dataset. In fact, part of the reason I'm here Is I am an urban transit sort of policy person. I have done a lot of work, publishing work In transit, so I know a lot more about transit than other aspects of city service provision. So we pulled out transit, we had a good data set for that, very solid. LA was Included In that dataset.

And the other one we picked out was -- I was talking to a colleague of mine, I said, well, find something less capital Intensive. I said, by golly, police looks okay, so we pulled up police services, and of course that Is kind of sexy. Everyone wants to know how their police services work.

Now, the Interesting thing about the parametric -- forget about that name. The Interesting thing about the other studies that have been done methodologically, okay, In terms of older studies, they had found that police services -- I think I mentioned this earlier -- basically a city of over 125,000 people probably has diseconomies and probably Is too big a city to provide effective police service.

What we are getting down here In our results end up pointing to roughly the same thing, which Is kind of Interesting because we are not even using In some sense the same data, the cost data that we used for that. So from a purely efficiency perspective, we are getting very similar results.

Next slide, please.

So what I have done for the first bit here, I have actually -- I came out with the scale computations for -- the reason I mentioned transit and police force, I am going to show a slide later that breaks down something else I'll discuss.

But I pulled up data on basically five services that had the most data, which were libraries, parks, police, transit, and streets. And again, I am going to backout police and transit In just a tad more detail.

The next slide.

This Is not quite the slide from hell. Oh, no, this Is not It. Okay, I'm sorry. It's the next one. We have data, we have numbers coming up very soon.

Just to give you an Idea of the sort of data we actually used for the study, for the transit we used the number of employees, number of vehicles, the equivalent amount of fuel used. That's almost a bit tricky when he have electrically powered rail and diesel powered buses. So what I ended up doing was converting all the energy sources Into a common energy unit like a joule, for Instance, and the outputs and outputs annual vehicle miles, the annual revenue vehicle miles.

For those of you who may know about this, they sound similar, but they are not. One, annual vehicle miles Is an empty bus. So It sort of says you can have empty buses running around, you can look efficient. The other one says the revenue vehicle miles says how many buses did you actually run which had people In them? Okay. So we used both measures to kind of see how efficient the company Is.

So, again, we are being fair. The bus company for the city could actually run empty buses and we wouldn't differentiate It, we say, well, see who Is more or less efficient In doing that.

In fact by Including the revenue vehicle measure we are getting a sense of how effective the service was In some sense.

3 and for police officers, again, the lack of data, we had a lot of data points. It was very difficult to get Inputs now for police. And again boring you with the details here, number of sworn officers, number of support staff, and the output was an FBI crime Index which Is basically an aggregate measure of different types of crime In a particular urban area.

Next slide. Here we are, slide from hell, numbers.

I think what Is Interesting to sort of point out here, and I will go over the next couple of slides, and I am kind of short on time here.

The percentage of cities In this sample provides scale efficient service. Now, this Is saying how many cities In that given year for that particular service were actually operating at that q star, at that sort of lowest cost level, If you want to think about It that way. They were optimum, they were the right size for providing that service.

You will notice -- I guess what stands out there Is that parks, which you might expect, there are large scale economies of park services. That Is how you want to Interpret that result.

Most of the cities In that sample, they had scale efficient park services. They were -- even though they were large cities, and In fact most of the cities In the sample were over a half a million people, that In fact they were providing the right level of service In parks.

Now the one to look at Is police as well.

4 virtually no one, virtually no one was scale efficient In the police provision services. So what we are saying here Is that these cities were basically too big, they were providing very Ineffective, very nonefficient police services, and maybe they ought to rethink some of the process.

And again we draw -- the library kind of went up and down and so did -- somewhat so did the street data.

So what we are going to do -- go to the next slide, please. Get rid of the number slide from hell.

And just a quick description here. So basically what I said earlier, that the results Indicate or these preliminary scale results Indicate that In general these major cities provide many services at Inefficient scale. So they are too big, right.

Some services are better provided on a smaller scale than at present. But again that result Is not ubiquitous. And this goes back to Milan’s point. Again, the devil Is the details, I suppose, but basically services are different.

There are some economies what we call scope.

Economies of scope basically says If two different services can share resources In some sense, you get cost savings from that. We don't have too much In the way of economies of scope for these services that we know. Large cities are all buraucratized. Generally these are all very separated.

This Is not to say that that could change In a sort of modern technological computer-based society that In fact certain services could be provided with economies of 5 scope. But what I am saying right now Is, given what we provide right now, given how we provide public services, you have to back out from the data and say look at them separately, they are different, the ubiquitous bigger or smaller doesn't hold for a city until you look at the services that going to be provided. That Is the lesson.

okay. Running out of time.

Let’s go to the next slide, actually.

Just again talking about police and park service, Is bigger better? Next slide, please.

What I did here, I compiled a table of the services, and again you want to think these numbers -- these are the percentage of the number of cities In this case, which actually have decreasing returns to scale In these services.

How many cities In the given sample, In the given year for police or transit service are too big? So you look at police, and you say okay, we had no data for '92. They are all too big. Basically there are a lot. This Is a large sample. This Is roughly 47 cities per year. You are talking roughly 42 cities per year provided too big a service.

I went and checked the data what cities don't.

Well, by golly, you would be surprised. Small cities like san Antonio, Texas, and again Tulsa, Oklahoma, come up. They look like they are providing, In the sample, more or less scale efficient services, okay.

And transit, of course, not so clear. There's a bit of a jump. And again, transit Is complicated too because we have federal subsidies and local and other regional subsidies that come In there and sort of spoil the brew.

But again contrasting with police, you see that transit, sometimes some cities do fairly well In providing transit services, but there are still quite a few which are probably too big to be providing transit service and should think about shrinking or downsizing their particular transit service.

And again, like I said, the lesson appears to be once you look at the Individual services, the scale results not ubiquitous, they are not common across services, at least the way we provide them now.

So, as Milan had mentioned, some sort of two-tiered local government where empirically -- and again there Is not a lot of data. This Is a very emotional Issue.

We are trying to sort of put some numbers behind this. Saying that there are services which clearly everybody Is an expert and says this city Is too big to provide this, but there are other services like parks where It Is not so clear that a large city can't provide that and cheaper than a smaller city.

Okay. Thank you very much. To index

Questions and Answers

Mr. Scott: question for James Nolan: did you differentiate the cities between union employees, per se, police, and nonunion police departments?

 Mr. Nolan: an excellent question. No, we did not we just collected the data as It was. Again, the data Issue keeps cropping up again.

The data we collected was essentially what the cities would give us about their police services. If I recollect, we may end up having a variable which Is described as union versus nonunion, but It wasn't Included as preliminary phase In the study.

I hope that answers the question. To index

Mr. Scott: Question for professor Dluhy, your tables 2 and do not Include transportation. Do you regard transportation needs argue for amalgamation or fragmentation? 

Mr. Dluhy: It Is not In there because that Is already a regional service In Florida, so It Is not an Issue.

Just the urban services were an Issue. It Is already regional and will stay regional because we have a port and things like that. So that will not be done by a municipality. To index

Mr. Scott: Question for Professor Sancton, do you envision any economic or service benefits derived from, I believe this Is either deamalgamation or deannexation?

Mr. Sancton: this Is quite foreign to my experience. It Is notable that part of the unicity In Winnipeg was actually successful In seceding, but It was largely a rural area. So we can't learn very much from that.

I simply don't know enough about It to answer.

I guess there Is one thing I would say, however, that I think everybody needs to keep In mind. I have been critical of the amalgamations In Canada for a number of reasons, and one of them was the transition costs weren't properly accounted for huge amounts of money, so-called one-time money, were spent on transition.

It costs a lot to reorganize things. So I always think of the transition costs of an amalgamation not being properly accounted for.

I guess what I would say to anybody around here Is that to do this thing honestly and properly, everybody should take account the transition costs of secession. I have no Idea what they might be, but there has to be some costs associated with that, and -- because you are breaking up organizations, setting up new communication systems, and all that sort of thing.

So the best I can do Is say do It honestly, do It properly, and If you are presenting numbers on that, don't assume away the costs of transition.

Sometimes there are savings In just continuing on doing things the same way. If you Invest some money In transition costs and you get big savings, then obviously that Is a good expenditure on transition costs. To index

Mr. Scott: I'll throw this one out to bob Poole. Should a more regional government establish standards for local units to Implement, I.e., housing and business development?

 Mr. Poole: I think probably professor Oakerson would really be the better qualified one to answer that.

I think In terms of the kind of scheme of governments that professor Oakerson laid out, that does make some sense. You need some basic ground rules at the metropolitan-wide or overall general city-wide level.

But within that, the crucially Important thing that has not been In the debate here In Los Angeles to date has been about real financial and service responsibility at the level of much more localized units within the larger framework. To index

Mr. Scott: Question for James Nolan, what effect of high tech Improvements Influence the results of police services since data was given only through 1996? Would bigger cities be better prepared for the cost of equipment?

 Mr. Nolan: I have to say that the police data ended up being short. I would have loved to have had some sort of data up to 1999, actually, so that was sort of useful.

I am not sure what technical changes In police provisions he Is talking about or If the person Is talking about possibly systems on cars. I don't know. I don't think I have enough Information to answer the question, quite frankly.

I think that If there was a major technical change In the '90s In police provision, perhaps there was, as there was a lot service Issues In trucking, for Instance. But yes, this would have to be redone and we would have to redo some of the sample and conclude -- I hesitate to say that because I think that given the results the police were so strongly that they were at diseconomies of scale, I would find It hard to believe that a change would make that big a difference. But you would probably see a climb In the percentage of firms that were scale efficient, doing It at the right size.

Mr. Poole: I used to work In the area of public safety and consulting, and I have tried to keep up with this a little bit.

Police In general Is a very, very labor-intensive service, so It Is true you now have more and more In-car computer terminal type of things, but that Is a relatively quite modest portion of the overall annual budgetary cost of the police department.

Also It Is something that relates directly to the dispatch function which, as professor Oakerson's data for the St. Louis area showed, Is one that Is typically greatly consolidated among many different provider units.

So again I don't think that technology question Is one that overturns the general diseconomies of scale results, given the labor-intensive nature of most of the police budget and the relationship of technology primarily to what are already centralized functions like dispatch.

Mr. Dluhy: I just wanted to add a comment I couldn't make In my 15 minutes. We are talking about some data here, economic data. The other side of your Issue Is responsiveness, and that Is what you are Interested In.

In our big survey of the county, we asked people Identify the kind of community they want to live In and what size, and they want to live In a community of 25,000.

People didn't want to live In small communities under 10,000, they didn't want to live In 100,000. They thought that was the scale that they were most Interested in whether that has a rationale In economics, I don't know. But what I think Is very Interesting Is how uniform and overwhelming that figure Is. To index

Mr. Scott: Question for for James Nolan: did you consider any other measurements for police service, other than FBI crime statistics, such as response time and the like?

 Mr. Nolan: yes, we did. There wasn't enough of It over enough cities to really use It. In fact, response time was sort of notoriously unreliable.

We had a lot of data from county type sheets from the cities. We were warned It was unreliable and there just wasn't enough of It. So we sort of said, well, maybe the next time we would use It. But, again, we have to cut the sample down to something so tiny that It wouldn't be worthwhile probably talking about It. To index

Mr. Scott: Question for for Andrew Sancton: wage harmonization, Is this really a term for unions forcing higher wages? 

Mr. Sancton: one of the big problems with these amalgamations Is you have a whole bunch of collective agreements, and they all have to be renegotiated previously 20, 30 or 40 unions In each municipality, different collective agreements, and then you are going to have one collective agreement for affecting maybe three or four different unions.

So you boil all these 20, 25, 30 collective agreements down to three or four. And the assumption of the accountants Is that you somehow magically get the average wage that was paid before.

But what happens In the real world of collective bargaining, the unions do what they are supposed to do, they bargain so that none of their members get reductions and that the evening-up process results In people being raised upwards.

So, sure, that Is the result of unions bargaining to protect the Interest of their members. There have been a few amalgamations In smaller places than Ontario, and I am only concentrating on the big amalgamations.

There have been some amalgamations In smaller places where municipalities with nonunion workers have been merged with municipalities that did have union workers.

This has been done by a government to stay with a promarket Idealogical orientation and pass lots of legislation that wasn't very friendly to unions.

but In those union-nonunion mergers, all of them resulted In a union workplace. And so you could say that the so-called promarket amalgamators were acting to Increase unionization. Doesn't matter whether It Is a good thing or a bad thing, that just happens to be the result of what the process brings. To index

Mr. Scott: Question for for Mr. Nolan: did you make any comparison between economy of scale and crime rates?

 Mr. Nolan: I guess I should have worn my police hat today.

economies of scale and crime rates? No. We didn't really have crime rate data, aside from the Index. We haven't done any sort of second stage correlations In some 3 sense, a la professor Dluhy has done at this point. Again, It Is just preliminary results with the data that we have.

you have to be forthright about that when you explain these results that In fact there are limitations to the data the crime Index, I think everyone In this room would have to agree that when you have aggregated crime Index which Includes the sort of measures that people like to talk about with crime, that you are probably doing as best you can and we managed to get that data fairly reliably.

Mr. Dluhy: there was no relationship In my study between size and crime rate. To index

Mr. Scott: this Is a narrative written question. question for Mr. Nolan: your computation for police services seems very simplistic, numbers of personnel versus crime Index. There Is much more to police work than just patrol equal crime suppression. How about detectives In specialized detective units, the swat teams, the training units, et cetera, et cetera? All these are Important parts of police work. Isn't your computation too simplistic? 

Mr. Nolan: I would like to say definitively no. I would also like to say that It would be nice to be able to break down Individual services In even greater detail and tell a more detailed story about what Is going on.

what I do find Interesting, and I tried to stress this In the talk, Is that not only do we get these results about police which look pretty strong, but we find they also accord with previous research from 40 years ago, 4 from 20 years ago that basically says here are the economies of size or economies of scale -- same thing -- for police services; we find that these, In this sample of larger major American cities we get virtually no one who Is at a minimum cost level. So that Is my opinion Is strong In agreement with the previous data.

and again, the previous studies don't go Into the kinds of detail you are talking about In terms of number of detectives and breaking down the number of employees. That was the breakdown we got from police services.

If someone Is out there who can get us better data for a number of cities on different types of police employees, I would love to see It, we would all love to see It.

but the fact of the matter Is It Is not really out there. And, again, the fact that our results accord pretty strongly, I mean you don't get this kind of strength of result, this kind of empirical research very often. The fact that the police data results accord with previous studies I think Is a fairly strong Indictment that we have got, at least among the Inputs and outputs we are using, we have got the right Indicators, at least In some sense, enough to tell the story.

Mr. Sancton: can I make a quick comment here.

I think It Is Important when you are looking at something like police to not always think of It just as police as a unified function, as Ronald Oakerson pointed out earlier today.

you can have small police forces and they can and do get together on some of these swat teams and murder Investigations and that sort of thing.

so professor Oakerson had a slide about that for Pittsburgh and St.. Louis county, how that was done. There Is Information on that In his book, which I use In my class at home.

we do get caught In traps here If we always think about police as just one service. It Is Important to break down police Into a whole bunch of different activities within police. To index

Mr. Scott: I have a softball question for everybody: how does privatization fit Into your concept of city organization?

 Mr. Sancton: I'll take a start on that. Ironically, one of the arguments given for amalgamations In Ontario was somehow creating larger units would make privatization easier.

one of the Ironies was that the people were so caught up In merging things that they didn't have time to think of alternative service delivery, they weren't able to address other questions.

but certainly the theory and I think the practice, as I understand It, Is that you don't have to get tied up with the Ideology of privatization, whether private companies are necessarily better or more efficient. The fact Is that, again, If you separate service provision, service arranging from service production, that means that small municipalities can contract with large private organizations In order to capture economies of scale for those services which there are economies of scale.

so privatization doesn't become an Idealogical Issue, It becomes the mechanism for providing, for getting a producer that Is able to capture economies of scale.

Mr. Dluhy: I was just going to say, I can think of a half a dozen communities throughout the state of Florida -- I am sure there are more -- that essentially have a city manager, a city clerk, a city council, and they contract out for all the rest of their services.

there are firms now that have developed, at least on the east coast, and those firms will come In and run the city for you, and they will subcontract, and In some cases they will contract with the county police to provide 911 patrol, and some cases they will go to a private sector firm to do the planning and zoning work.

I think the Issue there Is still community control. And the fact that they control their tax base and that they set the priorities and then I think privatization or contracting out Is the choice of the community.

Mr. Nolan: let me give a minor plug for the reason study which Is going to come out In a couple of months. We do talk about that a little bit.

the evidence Is not as strong as we actually thought It would be, but there Is some mild evidence that privatization does contribute to Increased efficiencies.

again, that Is not part of this talk. To index

Mr. Poole: I think a lot of what I would say has already been said, but clearly the whole key to making a more smaller scale arrangement for public services work Is the ability of those making the provision decision, whether It be a borough, council, or a neighborhood association or a business Improvement district, to be able to go out and select the provider for each particular service that offers the best value for the money, just exactly as every private business does.

and so we need to look for governance arrangements that make that opportunity available. We have signally failed to do that In our large centralized cities like Los Angeles, and that Is why the results that the forthcoming rppi study finds and a lot of others show very high service costs for large centralized cities. It Is because this choice mechanism Is simply not being taken advantage of.

this afternoon In one of our panels you will hear from the executive director of the California contract cities association. And, as In Florida, we have extensive contracting for services by smaller California cities. Some of them also have a city manager, a city council, and not much else. This Is both Intergovernmental contracting as well as private contracting, depending on the service of who Is available to provide that service.

so It Is a tremendously flexible tool, something that Is totally nonideological. It's simply a case of having the choices available and making a best value 8 comparison for each and every function that needs to be performed.

Mr. Dluhy: can I ask you a question? In the San Fernando valley If tomorrow you had to go out and divide It up Into either district councils or Into municipalities, have you done the work of what those would be and what the sizes would be? Mr. Ackerman: It already exists.

Mr. Poole: there are dozens of known neighborhoods: Sherman oaks, woodland hills, et cetera, et cetera. There are dozens of these that have well defined Identities. So that would be one possible starting point.

Mr. Dluhy: because down In Florida It Is exactly the same thing. They want to do that and do It In 10 years, they want to get out of the business. But they are having trouble with the boundaries because the boundaries are not all revenue neutral, that Is, some of the communities are really going to cherry pick and others don't, frankly. And so there Is that argument about doing no harm that I think comes Into It.

I just wonder whether you had done any of the work to figure out what those boundaries would be, either for the district councils or municipalities.

Mr. Fleming: that Is really a work In progress, as I understand. Some people are working on this In conjunction with LAFCO and with several groups that are studying It, experts studying It, but It Is still In progress. It hasn't been completed yet.

one of the things you might mention with regard to city costs, as we know now, the city of Los Angeles has about four million people. The city's budget Is four billion dollars a year. That Is a thousand dollars for every man, woman, and child living In the city of Los Angeles.

I wonder how that compares with other cities In the united states.

Mr. Dluhy: that Is double what It Is In Dade county. To index

Remarks by Larry Calemine

Mr. Scott: let me give the concluding comment to Larry Calemine who heads up LAFCO.

Mr. Calemine: In answer to your previous question, how would the valley be broken up, the state legislature has recently passed a bill and mandates that If the valley wants to separate from the city of Los Angeles, that LAFCO local agency formation commission would set district boundaries for council representatives and no district would represent more than a hundred thousand people.

so with about a million-three In the valley, you have a minimum of 14 council representatives plus a mayor elected valley wide. That Is In addition to the normal geographical community break-out. To index

Remarks By Joe Shea

we have one more mayoral candidate, who Is going to make a brief comment to us.

Mr. Shea: my name Is Joe Shea. You are not allowed to read about me In the L.A. times. That Is because I am the lone pro-secession candidate on the ballot. It will say underneath my name, which Is Joe, "secession advisor." now, when they talk about efficiencies here today, we need to start thinking about efficiencies of leadership. How efficiently can anyone lead a city that stretches all the way 34 miles from Sylmar In the valley, to San Pedro at the harbor? How can anyone really lead a city like that? It can't be done.

but If we can have four new cities, Hollywood, San Pedro, the San Fernando valley, and a new city of Los Angeles that will amalgamate leadership In each one of those cities and If we want to preserve some efficiency, let's form a regional purchasing authority that would provide for purchasing for those four communities that once were one.

and let's privatize that. Let's make those guys the junk yards dogs of cost. Let's bring down costs that way.

any of you have been up to sun valley, I think you will understand, If you go out yourself and you buy a fender, you get It for about 50 bucks. But If you go down to network auto body, you gets It for 1500.

we have got to have junk yard dogs at cost, and I will send them out there on behalf of the cities of Los Angeles, San Pedro, Hollywood, and the San Fernando valley.

please give me your consideration on April 10.

thank you very much. To index

Mr. Fleming: let me say Is this before you set up: get lunch, go back to the table, and at lunch we are going to hear from the gentleman from London who will be talking about the London borough system. London Is about maybe 50 percent larger than Los Angeles. So we are dealing with even a larger city than L.A. and talking about the borough system there. It will be very Interesting.

thank you.   To index

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