Montebello hires interim administrator to help solve financial problems

Faced with possible insolvency, city leaders in Montebello have approved a six-month contract with a real estate consultant to help the city climb out of its financial mess.

The council voted 4 to 1 Wednesday night to contract with Larry Kosmont at $25,000 a month to serve as Montebello’s interim city administrator. Under the agreement, Kosmont and a consultant with his firm, David Biggs, will share the duties of top administrator of the city and redevelopment agency.

Council members praised Kosmont’s experience and connections in the world of development and finance. Before launching Kosmont Companies in 1986, he was city manager in Bell Gardens and held administrative positions in Santa Monica, Seal Beach and Burbank.

“We need Larry’s expertise to help us with several large issues facing our city, and we have great confidence in his ability,” Mayor Art Barajas said in a statement.

The city is facing possible insolvency if it can’t obtain a loan by October, and state and federal agencies are scrutinizing its finances. The state controller’s office began an audit of the city Monday.

Kosmont said he approached the city to offer his services as part of a “turn-around team.”

“If you don’t get some professionals in City Hall that can manage these events properly, the city is going to have a really hard time getting back on its feet,” Kosmont said.

At the same time, he said, “The ship is definitely salvageable…. This is not doomsday for Montebello.”

Councilwoman Christina Cortez, who cast the dissenting vote, said she thought the city was overpaying and questioned the track record of Biggs, who was fired as Tustin’s city manager in March.

Kosmont and Biggs immediately replaced departing interim City Administrator Peter Cosentini, who resigned, citing differences with the council over the city’s budget problems.

Also Wednesday, the council approved a plan to substantially reduce the $16.8 million the city’s general fund owes to its redevelopment agency under a controversial loan agreement approved last year.

The loan is the subject of a lawsuit by Ara Sevacherian, the former owner of a local car dealership, who contends that it was illegal. Sevacherian is also suing the city for breach of contract over a $3.2-million property purchase an outgoing council approved in 2009 and the new council rescinded.

The council voted Wednesday to offset $13.5 million of the loan by prepaying annual payments the redevelopment agency has been making to the city to cover its debt service on some of its bonds.

The remaining $3.3 million owed by the general fund to the redevelopment agency must be paid by June 30.

abby.sewell@latimes.com