L.A.’s Loan of Employee to U.S. Project Draws Scrutiny

The city of Los Angeles is paying half of the salary and some travel expenses for the head of the city’s Housing Department while he is on loan to the federal government for six months--at a cost of nearly $40,000.

Gary Squier, who earned a glowing reputation in Washington for managing the city’s earthquake loan program, was recruited by Housing and Urban Development Secretary Henry Cisneros to help HUD solve a looming financial problem involving low-income apartments.

Cities often loan personnel to the federal government for special projects, on the premise that it will win the favor of Washington lawmakers.

But the cost of the deal raised concerns in the office of Controller Rick Tuttle, who asked his staff to look into the arrangement. Although the inquiry found that the deal was negotiated with the approval of the mayor and the City Council, Tuttle still has reservations about it.

“We had enough concern about this arrangement to make a pretty detailed inquiry,” he said.

Tuttle added that he is also concerned about Squier leaving at a time when auditors are expected to review the $300-million earthquake loan program to ensure that loan recipients paid prevailing wages and hired local workers.

Mayor Richard Riordan’s office defended the deal, saying the city will ultimately benefit from having Squier gain experience and make contacts in Washington that could help Los Angeles in the future.

“With Gary being a part of the program, the city earns dividends,” said Noelia Rodriguez, Riordan’s spokeswoman.

Councilman Mike Feuer said he doesn’t recall the details of the arrangement, which was approved in April, but believes that the deal is sound. “I have a lot of respect for Gary, and his work in Washington will benefit the city and the country.”

Squier began working for HUD last month and will return full-time to his city duties in October. Under the agreement, he works in Los Angeles two or three times per month. During his time in Washington, the city will pay for half of his salary, totaling $35,000. HUD will pay the balance.

Squier plans to return to Los Angeles every weekend, with HUD paying for two round trips each month and the city paying for one round trip per month, at a total cost of $4,200. Squier will pay for one round trip per month out of his own pocket.

While he is gone, Ann Sewill, the Housing Department assistant general manager, takes over and receives a negotiated salary bonus for that stint, according to the agreement.

While in Washington, Squier will head an effort to reduce subsidies to low-income housing units in an attempt to help balance the federal budget. The job is difficult because HUD does not want the owners of the 800,000 units nationwide who receive the subsidies to default on $18 billion worth of federally backed mortgages.

Los Angeles has 22,000 low-income units that received such subsidies, the second highest number of any city in the country.

In an interview from Washington, Squier said Cisneros asked for him to head the program based on his work in managing the earthquake loan program, most of which was funded by grants from HUD and the Federal Emergency Management Agency.

“He needed someone who could move quickly, and he believed I could do that,” Squier said.

He added that the city did not ask HUD to pay for his entire salary and travel expenses because the arrangement was a gentlemen’s agreement.

“We were just trying to establish what made sense,” Squier said.