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Land deal has been costly debacle for City of Industry

Firm controlled by ex-Mayor David Perez was paid for work that resulted in a proposed $5.8-million state fine

Four years ago, the City of Industry bought a collection of decrepit parcels along the San Gabriel River 20 miles away, with visions of transforming it into a recreational area for camping, hiking and picnics.

Today, the site of Follows Camp is a costly debacle, amid allegations by city officials that former Mayor David Perez ordered hundreds of thousands of dollars of unauthorized work — by a company he controlled — that resulted in a proposed state fine of about $5.8 million.

The tiny municipality of about 400 residents bought the land in October 2011 for $5.25 million, according to a recent city-ordered audit, which said the property was in "relatively poor condition" and subject to a Los Angeles County abatement order.

The city authorized Zerep Management Corp., a company headed by Perez, to clean up the property and clear it of health and safety hazards such as boarded-up structures, according to the audit and other records.

But Zerep went beyond the permitted scope of the project and performed other work that resulted in the "discharge of dredged material" into the river in violation of California's water code and Clean Water Act, city records show.

"I went out to see the project and discovered that employees of the City of Industry were actively working on re-opening the camp and had shown evidence of berm construction along the river's bank, bed and channel using material from the river," a state fish and game warden wrote in a May 2012 report, after being alerted to the construction work by a state biologist.

The unpermitted work resulted in the improper dumping of about 880,000 gallons of rock and sediment into the river, state records show, and the destruction of spawning habitat for a federally protected sucker fish. It also led to a proposed fine of about $5.8 million by the State Water Resources Control Board. The city has been trying to negotiate a reduced penalty.

In all, Zerep billed the city about $714,000 for its work at Follows Camp. City Manager Kevin Radecki estimates that 80% of it was for unauthorized work.

"At one point they just started doing things on their own," Radecki said Thursday. "There was no telling what was going on — just that they were billing us."

Radecki said Perez himself acknowledged ordering the work: "I'm 100% positive he ordered this work. He told me he ordered the work and he would take full responsibility."

As part of its own investigation, the city sent letters of inquiry to people involved in the project. Among those who received them was Mark Radecki, the city manager's brother.

"Who directed or asked you to perform this maintenance work?" the letter asked.

"City of Industry Mayor Dave Perez," responded Mark Radecki, who at the time was working for an engineering company not owned by Perez.

City records show that Perez, who resigned as mayor in 2012 citing health issues, also was sent a letter of inquiry. It was not clear whether he answered it.

Perez did not respond to a note requesting comment that was left at a house listed as his residence. A woman entering the house Thursday would not say whether Perez was there.

"I'm not going to answer any questions," she said.

If elected officials steer work to companies in which they or their families have a financial interest, it could represent a misuse of public funds, said Jessica Levinson, a Loyola Law School professor who studies public corruption.

"The mayor should only be making decisions that benefit his constituents, not himself," she said. "It raises a lot of questions about the potential misuse of his position."

Perez has come under increased scrutiny after the recent audit commissioned by the city. KPMG auditors found that Perez family businesses have been paid more than $326 million by the city over the last 20 years for services including building maintenance, trash pickup and street sweeping.

The city canceled its multimillion-dollar-a-year general services contract with Zerep in September. City officials said this week they also are seeking to renegotiate or possibly cancel an existing $12-million-a-year trash contract with Valley Vista Services, another Perez-family company.

The Follows Camp project is not the only taxpayer funded project that Perez is alleged to have taken personal control of.

Robert Barron, facilities coordinator for the City of Industry's Homestead Museum, said Perez showed up one day in 2009 and asked, "When are we ever going to get to work on this house?" About 10 days later, work crews arrived to repair floors at the museum's Workman House. Work continued intermittently for a couple of years and at one point, Barron said, workers told him it had been approved by Perez.

He said he also quizzed workers about whether they needed to get approval from the city.

"They said, 'No, Big Dave told us to keep going,'" Barron said.

Radecki, the city manager, said the work was not authorized and the city eventually stopped paying for it. Vince Perez, a nephew of the former mayor, called Barron and asked him to help get paid for $70,000 of unpaid invoices, according to a city memo recounting the incident. Barron said he could not do that, the memo says.

"He was trying to get Robert to authorize that expense," Radecki said.

Vince Perez did not respond to a phone call seeking comment.

kim.christensen@latimes.com

paul.pringle@latimes.com

soumya.karlamangla@latimes.com

Times staff writers Frank Shyong and Ruben Vives contributed to this report.

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