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

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

twitter.com/LATimesReston

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Comments

[SM]

Go Ms. Greuel, Go!

[West Valley Dave]

This should be an easy call for the Spring Street Gang of 15 but you and I both know that it won't be. These "civil servants" will fight tooth and nail to keep the booty looted from the city taxpayers.

[ron]

President Garcetti: now is the time to lead. Make an example and get rid of these slush funds that you and other rely upon.

[Mike]

Cough up the slush fund! Hey we all know who runs the city. its the unions. Step away from the slush fund and nobody gets hurt! Even the unions are in denial. LA has run out of ways to tax the people and raise fees. They see that when they rais taxes and fees people will now back off spending. One example is the outragous parking meter fee. I go to feed my stomach and not the parking meter so for now I will stay home rather than pumpung money into the meter. The union and its workers are in denial and believe all the city council has to do is just raise taxes to solve the problem. Look at the so called trash collection fee. How many ties has that fee been raised now and it makes no nent in the problem.

Maybe the only solution is to let it go to bankruptcy and let the courts step in. The courts will bring in a chain saw and slash those large salaries like butter.

Oh and the underfunded retierment plans to the tune of billions that will be like a nuclear diaster the courts can void those too.

[Linda]

This makes so much sense, I'm sure the councilmembers will refuse to do it.

[Jumbo]

thats real smart, sell the properties when the market is down. Should have sold them 2-3 years ago. I have this bad feeling they will sell them now, and buy them back in 8-10 years at double or triple the price they sold them for.

[Mike]

Not only caugh up the funds, give them back to the people.

Have moon beam brown do the audit of these funds.

To this day their has never been an audit of these funds.
The city controller is forbiden by law from auditing them.

These funds should go back to the people and not to pay the city's bills. If this money goses back to the city it wil only extend the city's problems for a few monnth and put off comming up with a real solution to their problem.

[jack]

In addition to the tab, "L.A. Budget Crisis," it would be nice if the L.A. Times also created a tab to help readers get directly to articles on the state of California "budget crisis."

i.e. State of CA Budget Crisis

They just "cut" 800 million from the state prison medical budget... despite being under Federal control with regard to the inmate medical funding. How can they CUT when the Feds are requiring the state to SPEND ?

[Jake]

This is criminal? How much money has been siphoned aside to pet contractors/service vendors? And Tony Vilar comes up with this now - this has been going on for how long?

The Feds need to step in, investigate everyone from Tony's office on down and take the bunch of them out in cuffs.

[Marlena]

Geez what a racket! What the hell do council members need with a special slush fund - that's the problem with government - so many opportunitites for corruption. I thought we were different from most 3rd world shiitt holes but the U.S. is really no different is it? No wonder no one wants to make any cuts - they are all aware of all these special slush funds hidden all over the City of LA

[Raphael]

As a longtime city resident, I only started following the city budget crisis a few weeks ago. Since then, it's been fascinating to see the degree in which the City Council lives in an alternate financial reality. Listening to some of the actual council meetings is an exercise in patience and restraint.

Janice Hahn, who I believe is running for lieutenant governor, has something like $2 MILLION dollars in her office slush fund. Instead of offering to transfer that money to cover city employee salaries, she's harping about raising taxes and fees on all of us! If she's so concerned about jobs (they only seem concerned about LA city employee jobs, not those of us outside their "city family"), then she should have offered that money up a long time ago.

It's very sad to see the failure in leadership and the disconnect between the city hall crowd and every day financial reality.

[Scott L]

Mike is right. The Unions run LA. Council members know they can't get elected without their support. So in the mean time the city goes broke, raises taxes, etc. to support the city employee jobs and their pension fund.

[vaughn]

discretionary funds should be used during times of natural disaters. they are emergency funds. your refocus shoud be drawing more business to l.a then safety,education,medical coverage. your budget should be balenced in that order. your tax codes chase business away and should be changed. you atrack more flys with honey. not chase them away. and stop over taxing the people. get rid of special interest groups and start putting the people of this great city first.you wouldn't need layoffs if you stopped wasting money on pet projects. then ask every department to take a 5% PAY cut for about 2 years. starting with the mayors office then the city concil members. after the cricus is over give it back to them wit promise 2 1/2 percent every 2 years. but first you must change your tax code from the state on down. the state has chanced their biggest industry away. the film industry. that should be the last thing we chase away.this state has landscape for every kind of movie or commercial you what to shoot. the most perfect sunsets, beaches,city and scenic views. wake up california especailly los angeles. layoffs won't fix your problem.

[Dan]

Get rid of the city council, which should help balance the budget, maybe even have some surplus.

[Sue]

How is it that the city councillors can make $171,648 (+bonuses) average?

[Mike]

Didn't somebody just get caught for having one of these slush funds in New York? They gave the money to charaties and local venders and those people funneled some of it back to the person. Wasn't it something like a million dollars?

I thought this just happened today or yesterday.

Hey Jerry Brown are you taking a look at this.

[Raul Gomez]

Solution for the city crisis is simple. Since the police and fire consumes 80% of the general fund, they should take a pay cut and contribute more to their retirement fund. The solution doesn't get any easier than that.

[Lornaj]

The money should be used but not all of it as the Pint SizeMayor wants. Vaughn you are that every department should take a 5 % cut. We can start with the Mayor's office and the city council.

[Julian B Duron]

SHARED SACRIFICE? For all the speeches this Patron of a Mayor made since he pitched his Budget of "SHARED SACRIFICE" and with the obvious duplicity of this Corrupt Political Machine called a City Council, lets start to see this SHARED SACRIFICE!
From every elected official from the Mayor to every City Council person. By Sacrificing of own salaries and benefits not just the slush funds and other perks. But take equal cuts of more than what they are stealing in furloughs and increased retirement of the lowest paid unions of the City of Los Angeles.
Or does this Corrupt Political Machine feels they are beyond public scrutiny until they term out or get re-called? I vote for re-call.

[Joemamabush]

That is right the unions need to quit the drinking of the kool aid. Wake up before it is to late. But it already had reached that.