Finger-Length Transactions: City Hall’s Standard

PERSPECTIVE-A sensible organization or individual would engage in an arm’s length transaction for a negotiation where assets or services are exchanged. 

Here’s a succinct definition of an arm’s length transaction according to Investopedia: A transaction in which the buyers and sellers of a product act independently and have no relationship to each other. 

The concept of an arm’s length transaction is to ensure that both parties in the deal are acting in their own self-interest and are not subject to any pressure or duress from the other party. 

Only fools would knowingly appoint a person whose interests conflicted with their’s to represent them in an important transaction. 

Not so, as far as the City Council’s standard operating procedure. 

Just recently, the brain trust a majority of the voters elected to the council made a proposal to settle the dispute between the city and the IBEW over the right to audit the secretive non-profit trusts – the Joint Safety and Training Institutes. Part of the proposal would allow the IBEW to veto the appointments of the mayor to serve on the boards of the trusts.   

That makes as much sense as allowing Vladimir Putin to select a committee to deal with the crisis in Ukraine. 

On the heels of this proposal, Councilman Paul Koretz, with the cooperation of his colleague, Paul Krekorian, is giving away a marketable city asset to an organization with political ties to the mayor.  

That’s the city’s idea of horse trading. 


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Now the latest war on checks and balances is being waged by the city’s other public unions. They want to block Mayor Garcetti’s appointments to the Labor Relations Board and, instead, have him select from a pool of candidates screened by the unions.  

Compensation and benefits amount to over 80% of the city’s general fund. If we expect the mayor to effectively manage operations while handcuffing his ability to negotiate personnel costs, then we are delusional. 

The evidence supports a severe case of delusion, given the officials we elect. 

Until we rid ourselves of them, labor negotiations will be conducted at finger’s-length. 

It will be the middle finger, and it will be aimed at us.


(Paul Hatfield is a CPA and former NC Valley Village board member and treasurer.  He blogs at Village to Village and contributes to CityWatch. He can be reached at: [email protected])






Vol 12 Issue 71

Pub: Sep 2, 2014