Audit: Calif. city misspent affordable-house money

AP News
Posted: Oct 20, 2010 5:52 PM
Audit: Calif. city misspent affordable-house money

Officials in the scandal-ridden city of Bell took at least $1.2 million intended for affordable housing and street repairs and used it to pay themselves huge salaries and other generous perks, according to an audit of the city's finances released Wednesday by the state controller's office.

"Public money dedicated to increasing affordable housing and maintaining local roads were instead used as a self-indulgent slush fund to pay for excessive salaries, perks and other unlawful expenses," said state Controller John Chiang, who released audits of Bell's Redevelopment Agency funds and its state gas tax funds.

Among those Chiang said received tens of thousands of dollars in salary and perks from the funds was ousted City Manager Robert Rizzo, who is charged with 53 counts of looting the modest, working-class suburb where one in six people live in poverty.

Chiang's office launched an audit of Bell's books three months ago, after the Los Angeles Times disclosed that several city officials were paying themselves exorbitant salaries. Eight current and former officials, including the mayor and vice mayor, have been charged with looting the city treasury.

Last month, Chiang reported that Bell officials mismanaged more than $50 million in bond money and levied millions of dollars in illegal taxes. He has demanded Bell reimburse property owners $2.9 million in illegally collected taxes.

On Wednesday, he said Bell must reimburse its gas tax fund $521,086 or the state may withhold future payments to the fund.

Interim city manager Pedro Carrillo requested the state audit in July. Bell officials did not immediately return calls seeking comment after Chiang's latest findings were released.

Chiang's report was released one day after the Los Angeles County Board of Supervisors directed its auditor-controller to review Bell's finances to determine whether the city remains financially stable enough to continue providing municipal services.

According to the latest state audit, $66,100 from Bell's low- and moderate-income housing fund was used to pay Rizzo, who had a combined annual salary and benefits package of about $1.5 million. Another $24,856 from the fund went to Lourdes Garcia, Bell's director of administrative services.

Garcia, who has not been charged with a crime, had an annual salary of $422,707, according to documents that have been posted on Bell's website since the scandal broke. City officials say she has since taken a 61 percent pay cut.

Rizzo received an additional $171,444 from another city redevelopment account, according to the audit. Garcia received $38,117 from that account and ousted Assistant City Manager Angela Spaccia received $27,066, according to auditors who said there was no evidence any of their work related to providing affordable housing.

Spaccia is one of the eight current and former officials facing criminal charges. Others include Mayor Oscar Hernandez, Vice Mayor Teresa Jacobo and Councilman George Mirabal.

In all, Chiang said, $244,850 in salaries, vacation, retirement contributions, holiday time and other compensation came out of the low- and moderate-incoming housing fund. Chiang's auditors also found the fund was used to pay for city cell phones, car washes, car batteries, landscaping and uniforms.

The separate audit of gas tax funds found more than $200,000 was wrongly paid to private contractors through overpayments, payments made without a written contract or for services that gas-tax funds may not be used for.