AZUSA — The city Redevelopment Agency has bought two small lots from a son-in-law of Councilman Lucio Cruz for $55,000, nearly three times the amount paid by another family member for the land six years ago.
State law prohibits council members from buying and selling land in redevelopment areas, but Cruz said he never personally owned the property and "did not make one dime" on its sale to the city agency.
Cruz, 63, a member of the City Council for 13 years, said the vacant lots purchased by the Redevelopment Agency in June never belonged to him. County records show that the property was owned in succession by his son-in-law, his wife and then another son-in-law.
But Cruz did make monthly payments on the property for 1 1/2 years while it was in the name of other family members and arranged to keep it in the family when ownership was threated by foreclosure.
County records show that the land was transferred within the Cruz family as a gift.
Mayor Eugene Moses, who has been politically at odds with Cruz, accused the councilman in an interview of hiding his connection to the property. Moses said that although Cruz abstained when the council voted to buy the land last December, Cruz never told his colleagues that the property was owned by members of his family.
In addition, Moses said, the city may have paid too much for the property even though the price was based on an independent appraisal.
The mayor raised the issue at a City Council meeting July 7, asking the city attorney whether a council member or his family can legally buy land in a redevelopment area and sell it to the city Redevelopment Agency.
City Atty. Peter Thorson said a council member cannot buy redevelopment property but relatives may if they are not financially dependent on the council member.
In an interview, Thorson added that the key question is whether the officeholder gained financially. He said there is no violation of the law if relatives deal in redevelopment property, if the transaction does not benefit the council member and he has no hidden interest in the property.
The Redevelopment Agency bought the two lots at the southeast corner of San Gabriel and Santa Fe avenues for a commercial project that is in the planning stages. The lots, vacant except for a billboard, are part of the central business district redevelopment area created in 1978. The lots total 6,462 square feet.
William and Lillian K. Grund, the former owners, said they sold the lots to Victor Gonzalez, a son-in-law of Cruz, for $19,500 in 1981. Later, they said, Cruz told them that he had provided the $10,000 down payment. They also said that they dealt directly with Cruz after the son-in-law defaulted on a trust deed note on the property and that Cruz made monthly payments on the note for 1 1/2 years.
In an interview, Cruz denied that he had provided the down payment or ever had a personal interest in the property, but said he had made several monthly payments on the land to help his son-in-law.
"Victor had problems at times. . . . He needed assistance," Cruz said.
County records show that Gonzalez transferred the property to his mother-in-law, the councilman's wife, as a gift in April, 1984, and that she gave the land as a gift two days later to another son-in-law, Robert Montano.
Cruz' wife used her maiden name, Caroline Valenica, on the deed transfers even though she is listed as Caroline Cruz on deeds involving other family property.
The recorded deeds contradict a claim by Montano that he bought the land from Gonzalez.
Montano told The Times that he bought the property from Gonzalez for $33,000 in 1984. A city appraisal report quotes Montano as saying that he paid $33,360, but does not identify the seller.
Neither Cruz nor Montano would explain why the property transfers were recorded as gifts if Montano paid money for the property and Gonzalez received money. Montano said he paid off a note owed by Gonzales and also paid him cash.
Cruz said his wife should never have been listed as the owner on the deeds because the transaction was between Gonzalez and Montano. It was by mistake, he said, that the land was deeded to her.
Montano offered a different explanation. He said Gonzalez transferred the property to his mother-in-law because he was in danger of losing it over financial difficulties. Montano said the family then realized that her ownership could create political problems for Cruz. Montano said he stepped in, cleared up the debt and compensated Gonzalez. Efforts to reach Gonzalez for comment were unsuccessful.
Montano conceded that the circumstances might lead some people to believe that Cruz had used family members to buy and sell redevelopment land to circumvent legal restrictions. But such a conclusion would be false, Montano said.
Cruz echoed that statement.
"I had no financial interest," the councilman said. "I was just helping out the family financially. I like to see them get ahead, not get in a hole. . . . I didn't gain anything by it."