Some Question Deal to Fund Firefighters

Los Angeles City Councilman Nick Pacheco has found a way to finance the hiring of 30 more firefighters in a tight budget year.

Amid a flurry of budget changes that the council approved in mid-May, Pacheco made a motion to direct money from the sale of city property in his district to the Fire Department, which had been strongly lobbying for an increase in staff.

Fire officials were thrilled. But others are questioning whether it’s a good deal for the city.

The sale will benefit a group of Pacheco’s political contributors who lease the 30-acre Los Angeles Wholesale Produce Market, a sprawling complex on Olympic Boulevard that the city has owned since the 1980s.

According to terms of the deal, the current tenants will be allowed to purchase the produce market directly from the city for $18 million without competition from other buyers, with the requirement that they use the facility as a produce mart until at least 2048. One businessman said he was willing to pay more for the property.

The tenants include several wholesale produce operators who have donated more than $10,000 to Pacheco’s campaigns. Mayor James K. Hahn, City Atty. Rocky Delgadillo and Council President Alex Padilla have also received substantial contributions.

The sale will also help finance a youth center in Boyle Heights that Pacheco wants to finish before he leaves office at the end of the month.

The deal, which will be up for a City Council vote today, has raised some eyebrows at City Hall and the ire of a potential buyer, who said he was shut out of the process. Richard Meruelo, who owns the adjacent Alameda Produce Market, said he is willing to pay $2 million more than the current tenants, but was not allowed to submit an offer.

“It’s very, very fishy,” said Meruelo, who added that he would have met the same requirements as the tenants.

City Administrative Officer William Fujioka said he believes the price is fair.

Still, incoming Councilman Antonio Villaraigosa, who will replace Pacheco on July 1, questioned the propriety of the sale.

“What’s the hurry?” Villaraigosa asked. Because it was not an open sale, “I think the duty is on the city to ensure that there’s not a gift of public funds.”

Pacheco defended the sale, saying that the tenants are longtime operators of the market who were promised that they would eventually be given ownership of it. The lease, however, does not address future ownership by the tenants.

“I was very sympathetic to the whole idea of them being the masters of their destiny on that space,” he said. “We need to keep our promises.”

He said the fact that some of the buyers donated to his campaigns had no influence on him, adding that he studied the issue for a year before deciding to support a direct sale to the tenants. He also noted that Meruelo is expanding his produce market at a nearby redevelopment area.

“It definitely did not seem in the best interest of the produce industry to have Meruelo be a monopoly,” he said.

The city built the Los Angeles Wholesale Produce Market in the 1980s after local wholesale produce vendors threatened to leave the city in search of a better facility. Since then, 25 vendors have operated out of the market, selling vegetables and fruit.

For the last two years, Pacheco has been pushing the city to sell the produce market, hoping to use the money to finance the construction of the Youth Opportunities Center in Boyle Heights, a facility that would house programs to help at-risk youths.

In January 2002, the council determined that selling the market directly to the tenants would be in the public’s interest because the vendors would continue to operate it as a wholesale produce market. That move, which was approved by Delgadillo’s office, allowed the city to circumvent its usual open-bid process and enter into negotiations directly with the vendors.

The council also determined that $7.5 million would go the youth center, with the remaining proceeds split between the Community Development Department and the Mayor’s Office of Economic Development.

The negotiations dragged on for the next year. Then on May 19, the City Council took up the budget, voting to set aside most of the new spending that Hahn proposed, including an expansion of the Police Department and hiring 30 more firefighters.

The council approved a motion by Pacheco that would give the Fire Department $1.5 million for the additional firefighters through the sale of the produce market. Other money from the sale would be set aside for new bulky item pickup centers and workers’ compensation investigators in the city attorney’s office, among other items.

Days later, the city finalized the sale price with the vendors.

Appropriation of the money still has to be approved by Hahn, who has not yet taken a position. But some council members question whether the city is getting as much money as it can.

“Serious questions have to be asked about this proposed sale before further approval is granted,” Councilman Jack Weiss said. “We all want to improve the readiness of the Fire Department, but there’s a real question of public trust that has to be answered first.”