The saga of Maywood’s downward spiral

This summer, the small city of Maywood made national headlines when it laid off most of its workers, disbanded the Police Department and contracted most city services to the neighboring city of Bell.

Maywood’s move was quickly overshadowed by the salary scandal in Bell, which resulted in the indictments of eight current and former city officials on charges of public corruption. Now Maywood is working to extricate itself from Bell and rebuild its own city government.

But an examination into how Maywood found itself in this position offers a window into the struggles of this group of small, largely working-class communities that straddle the 710 Freeway southeast of downtown L.A.

Maywood’s problems have their roots in an effort seven years ago to provide police services to another neighboring city, Cudahy.

The cities agreed upon a fee of $261 per officer hour, enough to cover Maywood’s costs.

But in the ensuing years, rising costs of policing Cudahy quietly drained Maywood of more money every year.

By 2009, its $5-million reserves were gone and the budget was in deficit. A city consultant discovered that the contract was actually losing Maywood $1.1 million a year.

Maywood’s insurer, and its city staff, urged the council to sign a more lucrative contract with Cudahy that would have rebuilt its reserves. But the council delayed. Members wanted to study forming a regional police force with Bell and other cities.

Instead, Maywood lost its insurance, forcing the city to hand over the reins to Bell.

“It’s an incredible story if you think of a community with a small budget throwing away” money like that, said Paul Philips, Maywood’s interim city manager in 2009 who noticed the contract’s problems and left when the City Council ignored his warnings.

Today, Maywood struggles to remain a city at all.

Interim city officials don’t have a clear idea how much the city has in reserve, though they say it’s sure to be minuscule.

“It’s a scary place we’re in right now,” said Gerardo Mayagoitia, a 34-year resident of Maywood, at a recent City Council meeting.

The saga — which started with that one ill-conceived police contract in 2003 — has led to questions about the economic viability of some southeastern Los Angeles County cities, where the tax base has withered along with the manufacturing that once supported the towns’ incorporation. Formerly home to Bethlehem Steel, Maywood now counts an Arco AM PM, King Taco and a McDonald’s among its largest sales-tax generators.

But the Maywood police contract story suggests these cities’ viability is threatened more by a dysfunctional political culture that undermines their economic progress.

Cities have thin budgets and frail civil service. Media coverage and political involvement are anemic, and civic organizations — Maywood has no chamber of commerce, for example — are scarce.

In this vacuum, individuals — at times city council majorities — have amassed remarkable power in cities such as Bell, South Gate and Bell Gardens.

Professional administrators have been ignored, undermined or fired in political tugs-of-war. Friendly consultants and loyalists with little expertise have often been hired in their places. The result is municipal improvisation, scandals and blunders that struggling cities can ill afford.

In five years, Maywood had three regular elections, a recall election and a special election. Three finance directors and three city attorneys came and went; so did three police chiefs. For parts of 2008 and 2009, the city had six additional interim managers.

But this chaos was just brewing when the Cudahy police contract was signed in 2003.

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For years, Maywood was home to white factory workers in a bustling manufacturing economy. Today it is 98% Latino, California’s densest city and one of its poorest.

In 1999, voters elected a young majority to the City Council. Every council member was a graduate of Bell High School, where Maywood students attend high school — a first since the city became predominantly Latino.

“We said, ‘We are what you wanted us to be’: Go to college, stay in the community — we represented that,” said Sam Pena, a leader of the new council majority.

Slim budgets forced the new majority to keep city salaries low, Pena said. Maywood didn’t often seek the best talent, but hired from within: city managers, police chiefs and others. Many employees did several jobs at once; turnover was high.

All this created an atmosphere, Pena said, in which city councils often took outsize roles in running Maywood.

Concerned with making city government work on a small budget, the young council majority used state grants to start sobriety checkpoints.

Pena said the checkpoints were intended to make the streets safer and winnow out the cars that choked Maywood.

But a state Department of Justice report found that the policy morphed into a way to enhance city revenue by exploiting its Latino illegal-immigrant population. Maywood police began stopping drivers who looked like illegal immigrants, according to the report.

Officers seized about 11,000 cars in Maywood from 2002 to 2005, each generating a minimum of $200 for the city, according to the state report.

That was all beginning when, in 2003, Cudahy asked Maywood to take over policing, Pena said. A rudimentary police contract was drawn up that charged Cudahy for man hours and little else.

At first, the contract was making Maywood some money, but it also required the City Council to be vigilant and adjust it every year to keep up with cost increases, said Cary Reisman, the attorney Maywood hired to write the contract.

“There’s absolutely no reason that that contract should have been a drain on Maywood,” said Reisman.

The contract allowed Maywood’s force to expand — and opened up a new area for its lucrative towing operation.

From 2004 to 2007, Maywood officers confiscated 5,600 vehicles in Cudahy, with each car generating a minimum of $200 for Cudahy, the state report found.

In 2005, enraged Maywood voters elected a new council majority. Police impounds largely halted. The new majority declared Maywood a sanctuary city for illegal immigrants, a move that attracted national media attention.

The Cudahy police contract became a political football.

The new council majority claimed the new Cudahy contract was costing Maywood. But the Maywood City Council never voted to study what the full cost was. The council only moderately increased what it charged the neighboring city.

In 2006, Maywood’s finance director, Mike Williams, resigned after 15 years on the job. He was succeeded by three interim finance directors in three years.

By early 2009, the city’s insurer had grown alarmed at Maywood’s governance. Decisions on hiring and contracts “were being neglected or turned over to the City Council,” said Norm Lefmann, assistant director of the Joint Powers Insurance Authority.

The fears were realized seven months later when Maywood had to postpone payment of its $900,000 insurance premium.

The authority continued to insure Maywood, but in exchange set out a governance plan for the city. Above all, the insurer wanted Maywood to hire a permanent city manager and sign a new police contract with Cudahy at a higher rate to provide revenue to pay its insurance premiums, Lefmann said.

Interim City Manager Paul Philips arrived in February 2009. He found that “the city manager had given up trying to influence policy and impose professional standards,” said Philips, who spent 27 years managing Lawndale, Artesia and Covina. Ed Ahrens, then-city manager of Maywood, did not respond to Times requests for interviews.

Under his brief watch, Philips ordered Maywood’s first full study of the Cudahy police contract, which found it alarmingly underpriced. Maywood wasn’t charging for full overtime costs or to maintain and replace patrol cars. The city had even forgotten to charge Cudahy for motorcycle officer overtime.

The consultant urged a huge fee increase to staunch Maywood’s red ink: $478 an hour, up from the $314 Cudahy had been paying.

Cudahy was willing. But the Maywood City Council dragged its feet.

Vice Mayor Veronica Guardado said the council was stung, having lost so much on the Cudahy contract. Insurance premiums were almost $1 million a year.

Instead of signing the new contract, the council turned to Bell with hopes of forming a regional police force. Bell’s assistant city manager and city attorney took the reins at Maywood.

But before that could happen, Maywood lost its insurance on June 30 — almost a year after its first warnings.

At the time, Maywood council members told The Times that the authority canceled the insurance because of large legal settlements against city police.

The truth, Lefmann said, is that Maywood failed to meet the authority’s basic requests to hire a city manager and renew the Cudahy contract.

“They needed to look to the professional managers and rely on the city manager for advice, and we didn’t see this happening,” Lefmann said. “We found we could not really trust the decision-making of the council.”

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Emil Flores, former Maywood Police Officers Assn. president, said the City Council used the Cudahy contract as an excuse to be taken over by Bell, and its now-indicted officials, believing high council salaries also went with it.

Inviting Bell officials in was “like asking the parolee next door to watch your kids,” Flores said.

At the end of October, Maywood and Bell officially parted ways — Bell with the bulk of its City Council facing corruption charges and Maywood with virtually no employees left to run the city.