Council Action Could Net Builder $403,000

Despite a city attorney’s opinion that the action is illegal, the Los Angeles City Council on Friday gave final approval to an ordinance that could refund up to $403,000 to a politically well-connected real estate developer.

The ordinance, approved after a debate that exploded into a vitriolic argument between Councilmen David Cunningham and Ernani Bernardi, calls for the refund of so-called “Quimby fees,” which are paid by developers to the city for use in acquiring park and recreational facilities.

Council members acknowledge that the ordinance was tailored to provide a refund of up to $403,000 to developer Jona Goldrich, a longtime supporter of Mayor Tom Bradley who has also made generous contributions to several council members in the past.

Under the ordinance, developers such as Goldrich can request refunds of Quimby fees already paid--or avoid paying them in the future--if they offer the city unspecified “additional considerations.” Only developers who use city bonds to finance their projects will be eligible for refunds.

The council will approve refunds to developers after negotiating with them.

Councilman John Ferraro, in a three-week fight for passage of the ordinance, heatedly denied that the ordinance was a political gift. Instead, he argued, the refund would allow Goldrich to lower construction costs--and thus rents--in his Miracle Mile-area rental complex.

As part of the “additional considerations” necessary for the refund, Ferraro said, Goldrich has agreed to drop rents by an average of $12 a month for 12 years. Goldrich will also be required to pay a construction tax on his apartment project, estimated at about $60,000.

Ferraro admitted that the rent break will be difficult to substantiate and will make only a slight impact in rents in the Museum Square apartments. Goldrich’s representatives have said that rents in the complex will start at $700 and range beyond $1,000.

Although the ordinance won 11-3 approval Friday, it was still unclear how many other refunds might be in order and how they might be administered.

The ordinance covers Quimby fees paid after Feb. 19. In a council discussion last week, Community Development Department officials estimated that fees from three dozen development projects could be affected.

Officials have determined that one prominent developer, Alan I. Casden of Beverly Hills, could be eligible for a refund of $415,000 in Quimby fees paid in the course of developing a Woodland Hills apartment complex. But Councilwoman Joy Picus, who represents the area, said she will oppose granting Casden a refund because she does not want to lose park funds. The council usually goes along with the wishes of the area representative.

The source of any refund also is in dispute. In a written opinion, Assistant City Atty. Norman Roberts said the council was acting illegally in setting in motion a possible refund.

The council, mayor and Recreation and Parks commissioners--who control Quimby fees--do not have the legal right to refund the money, Roberts said. Any refund would would have to come from the city’s general fund, he said.

Council members Pat Russell, Joan Milke Flores and Bernardi voted against the ordinance, and Bernardi in particular was targeted for harsh criticism by ordinance supporter Cunningham.

“I am sick and tired of your nit-picking. . . . Everything you tried to do has been destructive and harmful,” Cunningham bellowed at Bernardi.

“I have no trouble at all sleeping,” Bernardi responded.

Bernardi said he did not oppose an across-the-board lowering of Quimby fees, but he opposed treating individual developers differently. “If you want to change the law, that’s fine, but make it apply to everyone,” he said.