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

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Category: City News
Published on Tuesday, 16 February 2010 21:05
Written by Maeve Reston LA TIMES

Greuel says the money should be used to help rebuild the city's budget reserves. But Councilman Bernard Parks says it is an important funding source for community projects.

With Los Angeles facing a $212-million shortfall, City Controller Wendy Greuel called on City Council members Wednesday to give up their district's share of funds collected from the sale of city properties to help rebuild budget reserves.

In an audit, Greuel found that over the last 12 years, property sales and franchise fees from the miles of pipelines under city streets have generated almost $25 million that has been diverted into real property accounts controlled by council offices.

About $10.7 million is left in the property trust funds -- and that money is part of $40 million in the council's discretionary accounts that Mayor Antonio Villaraigosa would like to borrow this year to replenish the reserve fund. But council aides note that there are legal restrictions governing how the money can be used.

In past years when a city property was sold, half of the proceeds went into the account controlled by the council member who governed that area. The other half went into the general fund, which pays for basic services such as police, libraries and parks. Venice has a separate policy to ensure that all proceeds from that area's sales are used for Venice projects.

As a council member, Greuel sponsored legislation to divert all the money from property sales to the general fund for two years, a change that expires in June.

She said Wednesday that the change should be permanent, arguing that "everyone is going to need to sacrifice to help solve our current fiscal crisis."

Councilmen Dennis Zine and Jose Huizar immediately advanced that proposal.

But Councilman Bernard Parks said Greuel's audit glossed over the importance of the property funds to communities for repairing streets, building parks and putting in safety features that might take years to get through the city's regular budget process. Recently, his office designated money to fix a two-decade-old problem with standing water on a street in Baldwin Hills that he said "would never get fixed through the normal city process."

In another instance, Parks is putting traffic safety measures around Jim Gilliam Park after a speeding car slammed through metal barriers at the park's border and another nearly drove onto the baseball diamond. He said real property trust funds are "not . . . . being flitted away for an office party or a banquet -- 100% [is] going into the community."

The controller's office said the city is negotiating property sales that could bring in $7 million in revenue, and auditors identified another 12 unused city properties, including libraries, animal shelters and fire stations, which they said could generate an additional $15 million.

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