Housing Chief Loses Power in Vast Overhaul of City Agency

In a sweeping overhaul of the Los Angeles City Housing Authority, the City Council Wednesday drastically reduced the power of the agency’s controversial executive director, Homer Smith.

The council, which took charge of the troubled agency two years ago after allegations of mismanagement, approved a set of 35 reforms, which will force Smith to follow strict budgetary practices and prevent him from summarily firing many top aides, as he as done in the past.

The council essentially reorganized the agency’s entire management structure, even eliminating Smith’s top aide, who has been “calling the shots” for him, city officials said.

Council members who have been supervising the agency said they believe that the changes will put the agency on a sound course and allow the council to soon pass control to a citizens’ commission of mayoral appointees.

“We’ve taken the bull by the horns here,” Councilman David Cunningham said, adding that the changes will ensure that the people who depend upon the agency for shelter will receive “the best and most efficient service.”

The Housing Authority, which has a $175-million budget, provides about 31,000 low-income housing units in 21 large projects and thousands of subsidized apartments throughout Los Angeles.

The management reforms, which Smith fought all the way to the council floor and tried to sideline at the last moment, grew out of a yearlong review of the authority by the staff of four city agencies.

In highlighting management deficiencies, the report echoed similar themes of other reports during the last five years that have found bad contracting practices, wasteful spending and dictatorial personnel moves within the agency.

In the latest review, city staff members reported that bad management may have contributed to the agency falling eight years behind in carrying out federally funded programs to modernize the city’s 21 housing projects. The report also stated that improper planning may have led to the forfeiture of 400 new housing units that federal officials had pledged to the city but recently reclaimed.

The report characterized the authority’s current organizational structure as “top-heavy, duplicative and counterproductive.” It also noted a diluted system of checks and balances, diffused accountability and unsound budgetary practices.

Efficiency has been hampered by a turnover rate of 75% among the agency’s top 20 management positions, the report said.

But Smith countered in a letter to the council that “the report is clearly one-sided, filled with innuendo, conveys the erroneous perception of mismanagement and is clearly biased against the current management.”

He objected most strenuously to the elimination of his top aide, Ida Arestad, who once served as an executive assistant to former Los Angeles Mayor Sam Yorty.

Several council members and Housing Authority staffers described Arestad as the person who runs the agency for Smith.

‘Duplicative and Confusing’

In recommending elimination of her job, the management review report does not attack Arestad personally. But it states that “the employment of a deputy executive director at a salary of $71,190 to basically serve as an assistant to the executive director is costly, duplicative and confusing.”

Smith, who draws an annual salary of about $79,000, said that the elimination of Arestad’s post is “inexplicable” and “would seriously jeopardize the operational efficiency of the agency.”

Deputy Mayor Grace Davis said that Smith is distressed about losing his top aide because “I believe it’s been his style of management to rely on that one single individual. He’s going to have to change his whole approach.”

Under the revised organizational structure, Smith will no longer have 26 top employees working without Civil Service protection whom he can fire summarily. Most of them will be transferred to Civil Service status. But three will remain as top aides serving at Smith’s discretion and drawing salaries ranging from $45,000 to $65,000. One of the three will be designated to act in Smith’s absence and will receive a 10% salary increase.

Arestad is eligible to be appointed by Smith to any of the three lower-paying positions, said Faye Washington, who headed up the management review team for the office of the city legislative analyst.