Grand Jury Probing Redevelopment Agencies

A committee of the Los Angeles County Grand Jury has launched investigations into redevelopment agencies of the City of Industry and Alhambra.

Robert Beckerman, chairman of the jury’s Community Redevelopment Agency Committee, said it is looking into the Industry-Urban-Development Agency (IUDA), one of five Industry redevelopment panels. He also said the committee is studying the Alhambra Redevelopment Agency plan for Main Street.

Beckerman said a deputy district attorney has been assigned to the investigations and the accounting firm of Deloitt, Haskins & Sells of San Diego has been hired to conduct financial audits of the redevelopment agencies. The committee will publish a report of its findings in June.

Beckerman said the committee selected the two San Gabriel Valley agencies, along with the Los Angeles Community Redevelopment Agency, as part of its plan to examine a small, a medium and a large redevelopment agency. He declined to elaborate on the investigation of the Los Angeles agency.

Beckerman said the investigations spring from a growing concern among county officials that an excessive amount of property tax revenues--more than $200 million annually--is being diverted to 192 redevelopment projects in the county instead of being used to pay for other county public services.

In Alhambra, Beckerman said, the committee is not only auditing the agency’s books, but is also investigating whether the county failed to properly represent the interest of taxpayers last year in a suit in which Los Angeles Superior Court Judge Lester Olson ruled in favor of the city. Olson’s ruling entitled the Alhambra Redevelopment Agency to $50 million in county revenues over the next 45 years. The taxpayers are appealing the decision.

Beckerman said the committee’s probe of Industry and its principal redevelopment agency, the IUDA, was prompted by a federal investigation into public corruption in the city.

In industry, the joint investigation by the FBI and the U.S. attorney’s office was launched more than two years ago and has so far resulted in the conviction of Industry founder James M. Stafford and six other defendants in connection with a bid-rigging and kickback scheme that defrauded the city and its redevelopment agencies of $1.35 million in city construction contracts.

Assistant U.S. Atty. Gary Feess said the FBI continues to investigate other business transactions in which Stafford was a party. Feess would not elaborate.

Beckerman said the committee is investigating Industry because, “they (the city) still could have problems. It’s a very tight organization of family and relatives in the lead positions in the city. We have to break into that and see what it looks like.”

Mayor John Ferrero’s son, John Paul, is a City Councilman. Mayor Ferrero’s sister, Phyllis Tucker, is city treasurer and a financial officer in a Stafford-owned corporation. None of them has been accused of wrongdoing.

Feess wrote in documents submitted to U.S. District Court when Stafford was sentenced last November that Mayor Ferrero, Tucker, City Councilman Patrick Perez and IUDA board member Lawrence Mayo--a foreman in Stafford’s grain mill--have had longstanding friendships and business ties with Stafford. Furthermore, Feess wrote, Jerome Winstead, the former executive director of the IUDA, “obtained that position with Stafford’s assistance.”

Winstead resigned from the IUDA in January, citing the stress caused by the federal investigation. Winstead has not been charged with any crime.

Beckerman said the total bonded indebtedness of Industry’s redevelopment projects, the highest of any municipality in the state, is also the focus of the committee’s investigation.

Industry’s total bond debt, including principal and interest, is more than $1 billion, according to a spokesman for California Municipal Statistics, a San Francisco research firm. The spokesman said the principal on the city’s total bond debt was more than $574 million.