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L.A. controller asks City Council to give up property sale proceeds

February 10, 2010 |  1:08 pm

With the city facing a $212-million shortfall, Controller Wendy Greuel called on City Council members Wednesday to give up their discretionary funds from the sale of city properties to help rebuild shrinking reserves.

Greuel’s audit of the so-called real property trust funds found that over the last 12 years, property sales and fees have generated almost $25 million for council offices to use as they please. More than a quarter of that money was collected in the last five years from franchise fees for miles of pipelines that run under city streets.

Last week, the city’s budget analysts identified nearly $40 million in a series of off-budget accounts controlled by the City Council, including almost $10.7 million remaining in the real property trusts. A Times story detailing the discretionary accounts showed many council members used some of the money to cushion their offices’ salary budgets.

Mayor Antonio Villaraigosa, who ordered the elimination of 1,000 city jobs last week, has asked the council to loan $40 million from those accounts to replenish the city’s reserves, which could be nearly drained by this summer. But even a loan could require the council to change the laws that created the trusts, council aides say.

In years past when a city property was sold, half the proceeds went into the discretionary accounts controlled by the council member who has that property in his or her district. The other half went into the general fund, which pays basic services such as police, libraries and parks. Venice has a special policy to ensure that the full proceeds from sales in that area are used for Venice projects and programs.

As a council member representing the San Fernando Valley, Greuel sponsored legislation to divert the full proceeds from property sales to the general fund for two years. The temporary change will expire in June. On Wednesday, the controller urged council members to make the change permanent. 

“It simply does not make sense that properties are acquired using money from the general fund, yet when they are sold they go directly to particular districts and doesn’t benefit the entire city,” she said. 

“This is much-needed money for balancing our city’s budget deficit,” Greuel added. “Everyone is going to need to sacrifice to help solve our current fiscal crisis.”

The controller’s office said the city is negotiating property sales that could total $7 million this year. Auditors identified an additional 12 unused city properties, including libraries, animal shelters and fire stations, which they said could generate an additional $15 million if the council agreed to sell them.

-- Maeve Reston at Los Angeles City Hall



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