South Pasadena Spending Under County Inquiry

The county chief administrative officer is investigating this city’s 1981 purchase of $1.2 million worth of property for a now-defunct civic center project to determine whether the transaction violated the Community Redevelopment Agency’s spending agreement with the county.

At the center of the county’s probe is the city’s use of certain redevelopment-generated funds to buy property for the proposed civic center. County officials say that was not specifically allowed in their special agreement with the Community Redevelopment Agency governing how the money is to be used.

If the chief administrative officer determines that the agreement was broken, the city could be forced to repay property tax funds diverted from the county to the agency for redevelopment purposes, chief administrator’s analyst Dan Farkas said.

Farkas said, however, that if violations are found, exact sanctions, if any, would have to be determined at that time. He said the review will take another two to four weeks to complete.

Mayor Ted Shaw said the acquisition of property for the civic center, which he strongly supported, “was not a misuse of funds.”

Shaw also suggested that the allegation was politically motivated. “Someone’s stirring up the pot and I’m going to let them stir it,” he said.

The chief administrator’s inquiry was sparked by a district attorney’s investigation launched last May at the request of Thomas Biesek, a founder of the Committee for Responsive Government, a group formed in early 1984 to oppose the new city hall project. According to the district attorney’s report, Biesek contended in a letter that the city council acted “with the specific intent that a private person would make a profit of $750,000” and that the city failed to obtain a full appraisal before buying the property, as required by Government Code Section 7267.1.

The district attorney’s investigation was completed in December and it exonerated city officials and all others involved in the land acquisition of any criminal wrongdoing. The district attorney’s report said that the issue of South Pasadena’s compliance with laws governing property appraisals “was in eye of the beholder.” But the district attorney’s office turned the issue of redevelopment agency funds use over to the office of the chief administrator for review.

Records show that the city purchased two parcels of land, including an office building, at El Centro Street and Meridian Avenue from Dr. Frederick Aladjem for $1,135,000 in February, 1981, less than a year after Aladjem bought the property from Perkin-Elmer Corp. for $350,000. (In 1982, the city acquired a third parcel for $100,000.)

Deputy Dist. Atty. Richard Healey, who headed the investigation, said the county assessor’s office estimated the Aladjem property was worth about $1 million at the time the city bought it.

The proposal for a new civic center on the El Centro site stirred controversy almost from its inception.

Biesek, along with community activist Robert Wagner, who is now a councilman, led the fight against the project, contending that it would cost $5 million, far more than the estimated $2 million it would cost to rebuild and refurbish the existing facilities. They tried unsuccessfully to get the matter on last year’s April municipal ballot.

Wagner, however, was successful in unseating former Mayor Alvalee Arnold, a staunch supporter of the civic center. In November, voters overwhelmingly rejected the project in a referendum, and a special committee appointed by the City Council now is studying plans to refurbish the old City Hall on Mission Street and build new police and fire stations adjacent to it.

Wagner said he welcomes the chief administrator’s investigation, even if it costs the city some money. “They would be entitled to recover property tax they lost,” he said. “I think it would teach cities a lesson. If we have to pay the penalty, it’ll make taxpayers more cognizant of whom they select and elect for offices in the future.”

Councilman David Margrave, a supporter of the failed civic center project, said the city has some discretion in how it uses its public facilities money and agreed with Shaw that it has acted properly. “I am not concerned about it (the chief administrator’s investigation),” he said.

Shaw said the public facilities funds used for the property were proceeds from the Altos de Monterey redevelopment project in the 1960s and their use is regulated differently from regular tax increment revenues generated by the redevelopment agency.

The city planned to combine funds from the sale of the old City Hall with the public facilities money to buy the Aladjem site and build a new civic center that would house the police and fire stations allowed under the special agreement with the county, Shaw said.

Differentiating which funds would be used for what purpose would be splitting hairs, he contended, adding that he believes the issue is moot because the civic center project was killed.

The city is considering selling the site, but a final decision has not been made.