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Archive for October, 2016

Increased TV and film location shooting in Los Angeles is a good thing, but can it cross a line?

Some residents in a very quiet neighborhood Valley Village think so….and they have good reason. They support local filming, but a certain production has turned their block into a studio backlot extension for too many days.

Five times in two years, to be exact, for multiple days per event – all at the same residence. The permits cover 3-5 days each, although there is usually an added day at the front or back end for prep and breakdown. The hours run from 6AM to 10PM. However, the crews start arriving at 5AM. Overall, this quiet residential street has been a commercial zone for approximately 25 days within the last two years (with more to come), with 10-ton trucks, trailers, canteen vehicles and porta-johns lining both sides of the street. There are no ex-LAPD officers on hand.

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Aside from noise, difficulties backing out of driveways, lack of parking or inadequate access for emergency vehicles – concerns which can be mostly overlooked if they occurred a couple of times per year – the conversion of a residential street for commercial use on a semi-regular frequency is contrary to the right to enjoy one’s property.

There are no restrictions as to how often a specific block or residence can be used as a shooting location.

There are restrictions on yard sales, however.

The owners of the residence who allowed their home to be used are gone during the filming and do not have to put up with the inconvenience. There must certainly be some form of compensation involved. If so, I hope they report it on their tax returns. According to the residents I spoke with, they have not been responsive to appeals from the neighbors.

It would seem there should be a reasonable restriction on location filming in residential neighborhoods, including limits on the number and size of vehicles, the frontage occupied, the hours and days per shoot and minimum requirements for a permit approvals from the affected residents in accordance with the nature and scope of the shoot.

The zoning laws of our city are increasingly being ignored at the expense of the residents.

In this instance, the production company may be enjoying a tax credit for filming locally, but the residents receive little or nothing, only congestion, the aroma of the honey wagons, and noise late into the night.

Not a good deal.

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Last Thursday evening, I had the pleasure of attending a debate between two gentlemen in the race to replace termed-out Fran Pavley in the 27th SD. It was sponsored by the American Association of University Women (San Fernando Valley Branch), NOW and the League of Women Voters. Representatives from four West Valley Neighborhood Councils were there.

Henry Stern, who serves on Pavley’s staff, and Steve Fazio, a long-time small businessman in the San Fernando Valley, faced each other at the Westfield Mall, fielding questions from a panel and the audience.

The civility was refreshing.

The 27th is not my district. My reason for being there was to hear where the two opponents stood on California’s misguided and bloated high-speed rail project, particularly Mr. Stern’s view.

I met with him shortly before the primary. We discussed a number of issues, including HSR. I was impressed by his overall pragmatism, especially when it came to transportation priorities.

He stated then that he was supportive of commuter rail in general, but the HSR project was poorly conceived and planned.

I was wondering if he would stick to that position, especially when Lt. Governor Gavin Newsome recently flipped his stance. Perhaps Newsome buckled under pressure from the unions and contractors who stand to benefit from this financial debacle on rails, a project that is absorbing critical cap-and-trade funds.

If anything, Stern doubled down and recommended that the plan be put before the voters again.

He emphasized that HSR was putting the cart before the horse. What good would it be if we did not first develop intra-city transportation?

To be fair, Fazio also voiced strong opposition.

But if we are going to kill HSR, it would die a quicker death if there were more Democrats behind the effort to do so. That’s why candidates such as Stern and Patty Lopez, who is running for re-election in the 39th Assembly District, could further nudge others within their party to stop it before there is too much more money wasted.

Patty Lopez is engaged in a stalwart campaign, a rematch against party-insider favorite Raul Bocanegra. Despite her solid voting record along party lines, as well as getting several bills important to her constituents passed, the Democratic Party is supporting her opponent.

I’s all about money. Bocanegra spent lavishly on his colleagues’ campaigns in the 2014 election. He was an ATM for established members of the legislature. You don’t mess around with one of the good old boys, especially when he raises dough.

Yet, she stands a chance.

Bocanegra garnered only 44% of the primary vote this time compared to 62% in 2014 – the same year Lopez upset him in the general election. Perhaps money doesn’t buy as many votes these days. A measurable majority of voters did not support him.

A passage in a San Francisco Chronicle article about Lopez says it all:

“It’s nice to have an outsider in Sacramento,” said Lea-Ann Tratten, political director for the Consumer Attorneys of California, one of the few interest groups that have donated to Lopez.

“It’s refreshing. And frankly I think we need more of that. But that’s not how Sacramento works. It’s very much an insider game.”

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As the Wells Fargo scandal unfolded, in the back of my mind was just how the requirements of the Sarbanes-Oxley Act, enacted in 2002 in response to the Enron and Worldcom debacles, did not protect the investors, general public and the bank’s employees.

Sarbanes-Oxley is referred to as SOX. It did not create much in the way of new regulations, but it did formalize how publicly traded companies implemented and enforced internal control policies and procedures. It also raised the stakes for key corporate managers – including the Board of Directors, CEO, CFO and in-house attorneys – as far as their individual roles in assuring that the controls governing financial and ethical performance were observed. For example, corporate attorneys must report suspicions of fraudulent acts to their company’s chief legal counsel and CEO. They can go to the audit committee if there appears to be insufficient effort to investigate.

SOX also created the Public Company Accounting Oversight Board (PCAOB), or Peekaboo, as it is known by industry finance, auditing and accounting professionals. Peekaboo oversees the external auditors’ work, which had been largely self-regulated. Audit firms are now subject to inspections by the Board.

Violating any SOX regulation could be worthy of criminal charges, yet few executives have faced charges, much less been convicted, under its umbrella. It is seemingly stupefying considering key executives must sign certifications as to the accuracy of the financial statements, but understandable when CEOs are shielded by sub-certifications their companies make lower-level managers sign, creating buffers. It is reminiscent of a scene from Godfather 2, where a lieutenant of the Corleone Family tells a Senate Committee how the Godfather had layers of people between himself and those who took care of the actual dirty work.

There’s an excellent article which emphasizes how the additional layers obfuscates a CEO’s involvement.

But the impact on Wells Fargo’s financial statements was minimal, only $2.4 million. By itself, that would not create any stir on Wall Street, certainly not enough to push the stock price upwards.

And probably not enough to subject John Stumph to criminal charges, much less convicted, for deliberate misstatement of the financial statements. Just think – the DOJ did not bother pursuing a criminal action against Countrywide’s Angelo Mozilo, so why would it start now?

However, the phony accounts did create an illusion of long-term customer loyalty. One could argue that shareholders would be inclined to hold the stock longer than they otherwise would. Think of it as contrived price support.

Regardless, it was fraud.

It is almost certain that some of the sub-certifiers who knew of the scheme would gladly cooperate with the Feds and help prosecutors construct a trail to Stumph and his key people. Call it buffer-busting.

The DOJ should also look to what SOX refers to as Entity Level controls. Also known as “the tone at the top,” these cover the corporate culture and how it affects the risk of circumventing the activity controls directly related to financial reporting. So, an overly aggressive marketing program, similar to the one used by Wells Fargo, may create an atmosphere of fear among the sales staff and lead to fraudulent actions. A definite red flag which should have caused the SOX auditors to dig deeper at Wells Fargo.

In the end, why do we have SOX if it is not used to help bring down unscrupulous executives?

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Would you agree to guarantee a contractor a virtually unlimited amount of funds to build a house?

If the answer is “yes,” then there are some business people in Nigeria who would like to talk to you.

The MTA board may as well relocate its office to Lagos.

By an 11-2 vote, the board approved a permanent sales tax which is estimated to raise $860 million per year in today’s dollars. Theoretically, forever.

Proponents of the measure argue that the voters can always rescind it down the line if they are not happy with the results.

What would be the odds of success? Average citizens would have to not only organize a grassroots movement, but raise many millions of dollars to fight proponents backed by the deep pockets and logistics of developers.

We do need to raise many billions of dollars for transportation projects, but there must be accountability. An unlimited stream of cash will not incentivize the MTA and its contractors to manage budgets. Only the sobering reality of losing future funding offers a chance of ensuring financial discipline. It’s a fact of life – MTA board members will come and go. They will not have to live up to long-term promises.

The Measure attempts to assuage the concerns of the residents with the formation of oversight committees and independent audits, but there are no legal requirements for the MTA to implement recommendations or fix audit findings.

The only way to control the effective use of funds is by requiring the MTA board to re-approach the voters periodically – say in 20 years initially, then every 5-10 years thereafter, to up the level of funding. If they want to exceed the 40-year horizon of the proposed wave of projects, they must earn our support first by demonstrating cost-effective and timely progress.

Putting the onus on the passengers of a train to prevent a trainwreck, rather than insisting that the engineer apply the brakes before one occurs, is “bass ackwards.”

But that is essentially what Measure M will do by almost certainly assuring unlimited funding.

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