Vernon’s low rents good for residents, bad for city’s finances

The city of Vernon has spent more than $3 million over the last five years providing home renovations and reduced rents for top officials, their relatives and other tenants of city-owned properties.

The vast majority of Vernon’s roughly 100 residents live in city-owned properties, an unusual arrangement that has long generated accusations that the city’s leaders are able to select and control their electorate. It has been nearly 40 years since a new candidate was elected to serve on the Vernon City Council.

Vernon has paid more than $3.7 million to maintain and refurbish the homes since mid-2006 while taking in about $472,000 in rent, according to records obtained by The Times under the California Public Records Act. Some of the expenditures went for an extensive renovation, including exterior improvements, installation of new heating and cooling systems, and kitchen remodelings.

The records show that the low rents have placed a burden on the city’s finances, forcing officials to use general fund money to close the shortfall. The revelations are expected to put more pressure on the city to make good on promises to reform the housing system.

Some municipal law experts said the low rents could be viewed as a gift of public funds.

“There’s an implied quid pro quo; what you’re doing is buying a voting bloc to stay in power with public subsidies,” said Steve Erie, a professor of political science at UC San Diego. “With these kind of subsidies, who’s going to bite the hand that feeds him?”

Max Huntsman, a Los Angeles County deputy district attorney who has prosecuted three different Vernon officials on public corruption charges in recent years, said the reduced rents underscore the “sham” nature of Vernon’s elections.

“The way they do this is with this pretend electorate, which is bought off and kept small,” he said.

Though it is common for governments to subsidize housing for the poor and indigent, experts said it is highly unusual to use public funds to help cover the rents of city officials and others connected to City Hall.

Vernon owns nearly all of the residential property within its borders, charging monthly rents between $120 for a one-bedroom apartment and $360 for a three-bedroom house.

By contrast, homes in neighboring cities such as Maywood and Huntington Park generally rent for around $1,000 per month, according to real estate websites. Vernon residents pay less on average than even tenants in Los Angeles’ toughest housing projects.

Among the beneficiaries is Vernon Mayor Hilario Gonzales. He lives in a tidy, ranch-style home on Furlong Place, a cul-de-sac lined with palm trees and trimmed lawns behind City Hall. He earns $56,000 a year as mayor, which is a part-time job. The city charges him $360 a month for the three-bedroom home. His son and daughter-in-law live next door in another home owned by Vernon, paying $240 a month, according to housing records.

Despite the renovations, some Vernon residents saw their rents actually drop earlier this year when the City Council approved a new rate structure that charges $120 per bedroom.

“Right now the housing is operated at a deficit to the general fund, and there’s no reason for that,” said Steve Freed, president of the Vernon Property Assn. The properties “should be making money for the general fund.”

Vernon announced in April that it would move to reform the housing system as it faced possible disincorporation by the state Legislature. A new commission to manage the city-owned homes was formed in May.

Within the city, John Van de Kamp, a former California attorney general who is working for Vernon as an ethics advisor, has recommended changes to the housing system. This summer, Van de Kamp released a report stating that 25 of the 62 registered voters in Vernon have direct connections to City Hall. The Times reported last year that the residents include nephews of City Administrator Mark Whitworth and relatives of City Council members. The city owns about 25 housing units total.

Van de Kamp recommended that rents be set on a market basis and that the housing commission “establish policies that avoid favoritism to city personnel and their relatives and friends.” He also suggested that the city consider selling the properties.

Vernon’s City Council will vote on a new rental policy Tuesday that calls for rents to be based on a market value determined by independent analysis and states that, other than emergency personnel, no other applicants shall be granted special leasing priority. The policy was formulated in recent months by the new housing commission, which is composed of local businessmen, residents and Mayor Gonzales.

“Right now we’re all focused on getting the policy worked out and the procedural stuff in place and then diving into the crux of raising rents, and development and adding new voters.... There’s nothing that’s not on the table,” said Eric Gustafson, chief executive of a Vernon-based food-packing company who is chairman of the housing commission.

A group of more than 30 Vernon residents — including four council members — have also signed a petition in which they strongly deny that the low rents influence how they vote in city elections. The petition was sent to Assembly Speaker John Pérez (D-Los Angeles), the author of the disincorporation bill.

Vernon officials say they remain committed to the housing reforms, even after Pérez’s disincorporation bid failed in August.

“The city government knows it made a commitment to do these things, and they can’t backslide on that commitment,” city spokesman Fred MacFarlane said. “It’s a new day.”

But there is some skepticism from outsiders that adjusting rents alone will result in a more independent voting population — or whether rent increases will be large enough to reverse the budget shortfalls.

Vernon has a history of pushing out residents who posed a political threat. In 1980, the city evicted a retiring police chief from his city-owned home after he said that he was running for a council seat.

Then, in 2006, three men moved into an abandoned building and, after a prolonged legal fight, forced Vernon into the city’s first contested council election in more than 20 years. Vernon officials responded not only with lawyers but with armed private investigators, who tailed the political interlopers. The challengers were ultimately defeated.

Huntsman, the L.A. County prosecutor, said that only by drastically increasing the city’s population to 500 residents or more would real change occur.

“The evidence is incontrovertible that what’s going on in Vernon is that it’s a sham designed to look like a city but not really act like a city,” he said.

Michael Colantuono, a municipal law expert who advised the disincorporation effort, said he saw no justification for subsidizing the rents.

“The purpose of public housing subsidies is to ameliorate poverty … and it has to be done in a fair and rational way,” Colantuono said. “It seems to me that Vernon’s program lacks all of the criteria that would establish it as a lawful and appropriate public housing program.”

hector.becerra@latimes.com

sam.allen@latimes.com